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:

Working Capital

The difference between a company's current assets and current liabilities, indicating its liquidity and operational efficiency.

Discount Factor

A multiplier used in discounted cash flow (DCF) analysis to calculate the present value of future cash flows, accounting for time value of money.

Salvage Value

The estimated residual value of an asset at the end of its useful life, often considered in depreciation calculations.

Cash Operating Costs

The expenses directly associated with the day-to-day operations of a business, excluding non-cash items like depreciation.