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.

Understand the rationale behind rational expectations theory and its application in economic policy.

Understand the concept of disinflation and its effects on the economy.

Differentiate between short-run and long-run Phillips curves and their shifts.

Recognize the impact of world commodity prices on the economy.

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Definitions:

Aging of Accounts Receivable Method

An accounting technique used to estimate the amount of receivables that are unlikely to be collected, based on the length of time they have been outstanding.

Percentage of Sales Method

A forecasting technique used to predict various financial figures, such as expenses or inventory levels, as a fixed percentage of sales.

Allowance for Doubtful Accounts

A contra asset account representing the amount of accounts receivable a company does not expect to collect.

Equity

Equity represents the value that would be returned to a company’s shareholders if all the assets were liquidated and all the debts repaid.