Author Question: To what does the GDP gap refer? a. The difference between real and nominal GDP. b. The difference ... (Read 209 times)

james9437 · **on:** Jun 30, 2018

To what does the GDP gap refer?
a. The difference between real and nominal GDP.
b. The difference between this year's real GDP and last year's GDP.
c. The difference between full-employment real GDP and actual real GDP.
d. The difference between real GDP in the prior trough and real GDP in a current trough of the business cycle.

Question 2

Which of the following would most likely occur if the federal government decreased its spending and reduced the size of the budget deficit during a period of full employment?
a. The rate of inflation would decline.
b. The rate of inflation would rise.
c. A recession would develop.
d. Interest rates would fall.