In the Macroeconomic Long Run

question 139

Multiple Choice

In the macroeconomic long run,

• A) output always is above potential GDP.
• B) there is full employment and real GDP is equal to potential GDP.
• C) there is full employment with no unemployment.
• D) GDP always is below potential GDP.

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Definitions:

Value Added

The increase in the value of a product or service as it passes through each stage of production or supply chain.

Marginal Productivity

The extra output or benefit gained from increasing one unit of a particular resource while keeping other resources constant.

Income Distribution

The way in which total income is divided among individuals or households in an economy.

Labor

The human effort, both physical and mental, used in the production of goods and services.