Which of the Following Statements About Potential GDP Is True

question 92

Multiple Choice

Which of the following statements about potential GDP is true?

• A)Potential GDP is not equal to the maximum level of real GDP.
• B)Potential GDP is equal to the downward trend in real GDP.
• C)Potential GDP represents the GDP a country will experience when the real interest rate is equal to zero.
• D)Potential GDP represents the long-run tendency of the economy to grow.
• E)Potential GDP is equal to the average level of real GDP.

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Definitions:

Variance

A statistical measurement of the spread between numbers in a data set, indicating how far each number in the set is from the mean.

Covariance

A measure that indicates the extent to which two variables change together, indicating the direction of their linear relationship.

Linear Relationship

A type of relationship between two variables where a change in one variable is associated with a proportional change in the other.

COV

COV refers to the coefficient of variation, a statistical measure of the relative dispersion or variability of a data set relative to its mean, expressed as a percentage.