When an Economy Is Experiencing a Negative Output Gap, It

question 33

Multiple Choice

When an economy is experiencing a negative output gap, it means that the:

• A) actual output is less than their potential output.
• B) actual output is more than their potential output.
• C) price level is rising.
• D) price level is falling.

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Definitions:

Euro

The Eurozone's official monetary unit, adopted by 19 out of the 27 countries in the European Union.

International Monetary Fund (IMF)

An organization of over 150 nations set up as a lender of last resort, especially to nations that had otherwise been planning to devaluate their currency, or were in financial crisis.

World Bank

An international banking entity that delivers financial support in the form of loans and grants to less affluent countries, aiming to assist them in implementing capital projects.

Low-interest Loans

Loans offered with a lower than average interest rate, typically provided to encourage borrowing or stimulate economic activity.