The Following Table Shows Real GDP and Potential Real GDP

question 59

Multiple Choice

The following table shows real GDP and potential real GDP for the years 2005-2015. Refer to this table when answering the following questions.
Table 10.1 ($ billions) (Source: Federal Reserve Economic Data, St. Louis Federal Reserve)
-About how much did short-run output equal in 2009 and 2015, respectively?

• A) -6.4 percent; -2.0 percent
• B) 6.9 percent; 2.1 percent
• C) 93.6 percent; 98.0 percent
• D) 106.9 percent; 102.1 percent
• E) Not enough information is given.

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Definitions:

Market Risk Premium

The additional return an investor requires from a market portfolio over the risk-free rate, compensating for the risk of the investment.

Financial Leverage

The use of borrowed funds to increase the potential return on an investment.

Shareholder Leverage

The use of borrowed funds by shareholders to increase their potential returns from an investment.

Operating Leverage

A measure of how revenue growth translates into growth in operating income due to fixed costs in a company's business model.