Question
What is absolute advantage?
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Answer
Producing more of a good with the same resources.
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Question
What does the output gap measure?
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Answer
Actual GDP−Potential GDP
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Question
What fiscal stance is contractionary, and when is it most appropriate?
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Answer
T>G; most appropriate when the economy is overheating.
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Question
What fiscal stance is expansionary, and when is it most appropriate?
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Answer
G>T; most appropriate when the output gap is negative.
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