If Real GDP Stays Below Potential GDP

question 39

Multiple Choice

If real GDP stays below potential GDP,

• A)the AD curve will begin to shift to the left.
• B)the IA line will shift down.
• C)potential GDP will decline.
• D)the IA line will shift up.
• E)the AD curve will begin to shift to the right.

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Definitions:

Break-Even Point

The point where the amount produced or sold matches the overall expenses, leading to neither a profit nor a loss.

Contribution Margin

A profitability metric that calculates the amount of revenue remaining after deducting variable costs, used to cover fixed costs and generate profit.

Selling Price

The amount of money for which a product or service is offered for sale to customers.

Contribution Margin Ratio

The percentage of revenue remaining after variable costs have been subtracted, indicating how much revenue is available to cover fixed costs and generate profit.