Which of the Following Is False About Potential Output

question 65

Multiple Choice

Which of the following is false about potential output?

• A) It is the level of output an economy can achieve when labor is employed at its natural level.
• B) It is the long run output level that guarantees price stability.
• C) It is also called the natural level of real GDP.
• D) If a country is producing its potential output, then it is producing at a point on its production possibilities frontier.

---

Definitions:

Modigliani

Refers to Franco Modigliani, an Italian-American economist known for his work on corporate finance, the Modigliani-Miller theorem, and the life-cycle hypothesis of saving.

Developed

Pertains to countries that have a high level of industrialization, a high standard of living, and a well-established economic structure.

Evaluating Mutual Funds

The process of assessing the performance, management, and investment strategies of mutual funds to determine their suitability for an investor.

Rank Portfolios

The process of arranging portfolios in order according to a certain criterion, such as return or risk.