When Two People Trade

question 145

Multiple Choice

When two people trade,

• A) both of them expect to be made worse off by the exchange.
• B) they are trying to help out each other.
• C) they know one of them will get the better of the other.
• D) they both expect to be made better off by the exchange.

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Definitions:

Actual Output

The real quantity of goods and services produced by an economy or firm at a given period, regardless of capacity.

Nominal GDP

The overall economic output of a country, consisting of all final goods and services produced in a defined period, assessed at prevailing market prices without correction for inflation.

Short-Run Aggregate Supply Curve

The short-run aggregate supply curve represents the relationship between the total supply of goods and services that firms in an economy are willing to produce and sell at different price levels, over a short period.

Recessionary Gap

A situation where an economy's real GDP is lower than its potential GDP, indicating underutilized resources and economic slack.