When Real GDP Is Less Than Potential GDP

question 184

Multiple Choice

When real GDP is less than potential GDP

• A) people work longer hours than usual.
• B) some labor is unemployed.
• C) some capital equipment is underused.
• D) Both answers B and C are correct.

---

Definitions:

Firm's Risk

The total risk associated with running a business, including both systematic and unsystematic risks.

Market Risk

The risk of losses in investments due to market variables such as price changes, interest rates, or currency exchange rates.

Discount Rate

The interest rate used to discount future cash flows of a financial instrument to present value.

Debt-equity Ratio

The metric illustrating the proportionate investment of equity and debt in asset financing for a company.