When an Economy's Actual Output Is Greater Than Its Potential

question 161

Multiple Choice

When an economy's actual output is greater than its potential at some point in time, we say that it is experiencing:

• A) a positive output gap.
• B) a negative output gap.
• C) inflation.
• D) deflation.

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Definitions:

Cost Center

is a segment of a business that does not directly generate revenue but incurs costs, like a human resources department.

Generates Revenues

The process through which a business earns income from its normal operations, typically through the sale of goods and services.

Profit Center

A unit or department that incurs costs and generates revenues.

Revenue Center

A division or unit within a business responsible for generating significant income.