The term inflationary gap refers to a situation where:
Actual output is less than potential output
Actual output is greater than potential output
The inflation rate is high
The unemployment rate is low
Correct Answer :
B. Actual output is greater than potential output
Related Questions
The term structural deficit refers to a deficit that exists even when the economy is operating at:
Full employment
Below full employment
A recessionary gap
An inflationary gap
The term marginal revenue refers to:
The additional revenue earned from producing one more unit of a good or service
The total revenue earned by a firm
The total cost of producing a given quantity of a good or service
The additional cost of producing one more unit of a good or service
The term government budget surplus occurs when:
Government revenues exceed government expenditures in a given period
Government expenditures exceed government revenues in a given period
Government revenues and expenditures are equal in a given period
Taxes are too high
The term capital stock in economics refers to:
The total amount of money in an economy
The total value of physical and human capital in an economy
The total amount of money held by households
The total amount of money held by businesses
The term market equilibrium refers to a situation where:
The quantity supplied is equal to the quantity demanded in a market
The quantity supplied exceeds the quantity demanded in a market
The quantity demanded exceeds the quantity supplied in a market
The price level is constant in a market
The term opportunity cost of capital refers to:
The return that could have been earned if the capital was used in an alternative investment
The total cost incurred in producing a good or service
The cost of goods and services in an open economy
The total cost of producing all units of a good or service
The term fiscal policy refers to:
Government policies related to taxation and spending to influence the economy
Central bank policies related to interest rates and money supply
Policies aimed at regulating international trade
Policies related to the regulation of financial markets
The term deficit spending refers to a situation where:
The government's expenditures exceed its revenues in a given period
The government's revenues exceed its expenditures in a given period
The government's expenditures are equal to its revenues in a given period
The government borrows money from the central bank
The aggregate demand curve shows the relationship between:
The price level and the quantity of real GDP demanded
The interest rate and investment spending
The price level and the quantity of money demanded
The exchange rate and net exports
The term liquidity trap refers to a situation where:
Interest rates are so high that people prefer to hold cash rather than invest or spend
Interest rates are so low that people prefer to hold cash rather than invest or spend
Inflation is high, leading to a decrease in the purchasing power of money
The central bank loses control over the money supply
The term balance of payments refers to:
A record of all economic transactions between residents of a country and the rest of the world in a given period
The difference between government revenues and expenditures in a given period
The difference between exports and imports of goods and services in a given period
The total amount of money in circulation in a country
The term regressive tax refers to a tax:
That takes a larger percentage of income from low-income individuals than from high-income individuals
That takes a larger percentage of income from high-income individuals than from low-income individuals
That is the same for all individuals regardless of income level
That is only imposed on corporations
The term cost-push inflation is caused by:
An increase in production costs that leads to higher prices
An increase in consumer demand for goods and services
An increase in government spending on infrastructure projects
An increase in the money supply by the central bank
Which of the following is a tool of monetary policy used by the Federal Reserve?
Open market operations
Government spending
Taxation
Fiscal stimulus
The term balance of trade refers to:
The difference between a country's exports and imports of goods and services
The difference between government revenues and expenditures
The difference between a country's savings and investments
The difference between the government budget deficit and surplus
If the government decreases taxes and increases government spending, it is implementing:
Expansionary fiscal policy
Contractionary fiscal policy
Expansionary monetary policy
Contractionary monetary policy
The term tax multiplier refers to:
The change in output resulting from a change in government spending
The change in output resulting from a change in taxes
The change in consumption resulting from a change in disposable income
The change in investment resulting from a change in interest rates
The term tax incidence refers to:
The way in which the burden of a tax is shared between buyers and sellers in a market
The total amount of revenue collected by the government from taxes
The impact of a tax on the overall level of prices in an economy
The distribution of income among different households in an economy
The term hyperinflation refers to:
An extremely high and rapidly increasing inflation rate
A moderate and stable inflation rate
A period of deflation in the economy
A period of steady economic growth
The term real wage rate refers to:
The purchasing power of wages after accounting for inflation
The nominal wage rate adjusted for taxes
The average wage rate in an economy
The wage rate set by the government
The term money multiplier refers to:
The ratio of the change in the money supply to the change in the monetary base
The ratio of government spending to the level of GDP
The ratio of taxes to disposable income
The ratio of investment to savings in an economy
The term sticky prices refers to:
Prices that do not change quickly in response to changes in supply and demand
Prices that are set by the government and cannot be changed by firms
Prices that are adjusted continuously in response to changes in the economy
Prices that are set by monopolies to maximize profit
The term real interest rate is:
The nominal interest rate adjusted for inflation
The interest rate charged by banks on loans
The interest rate earned on a savings account
The interest rate set by the central bank
The term marginal propensity to consume (MPC) refers to:
The change in consumption resulting from a change in disposable income
The total amount of consumption in an economy
The change in investment resulting from a change in interest rates
The total amount of saving in an economy
The long-run aggregate supply curve is vertical because it is determined by:
The level of government spending
The level of potential output
The level of aggregate demand
The level of inflation
The Federal Reserve's main tool for controlling the money supply is:
Open market operations
Reserve requirements
Discount rates
Government spending
The term complementary input refers to inputs that are:
Used together in the production process
Used interchangeably in the production process
Completely unrelated in the production process
Unrelated to the production process
If the government implements contractionary fiscal policy, it will likely lead to:
Lower inflation and lower economic growth
Higher inflation and higher economic growth
Higher inflation and lower economic growth
Lower inflation and higher economic growth
Which of the following is a measure of income inequality?
Gini coefficient
Consumer Price Index (CPI)
Producer Price Index (PPI)
Lorenz curve
If the nominal interest rate is 5% and the inflation rate is 3%, the real interest rate is:
8%
2%
3%
5%