What Is Potential or Full-Employment Output

question 3

Multiple Choice

What is potential or full-employment output?

• A)the maximum GDP that an economy actually achieves throughout its entire history
• B)the level of output achieved during periods when all of the labour force is employed
• C)a target level of income determined by the government
• D)the GDP that would be produced if the economy's resources were fully employed at a normal intensity of use
• E)the GDP that could be produced if the economy's resources were fully employed at their maximum intensity of use

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Definitions:

Units Per Period

A measure of productivity or output over a given time frame, indicating the number of units produced or sold.

Diminishing Marginal Returns

The principle that adding more of one factor of production, while holding others constant, will eventually yield lower additional outputs.

Total Product

The overall quantity of output produced by a firm from a given quantity of inputs.

Constant Rate

A consistent, unchanging speed or pace at which something occurs or changes over time.