Potential GDP Is

question 71

Multiple Choice

Potential GDP is

• A) always different from real GDP.
• B) another name for real GDP.
• C) the level of GDP not adjusted for price changes.
• D) the maximum amount of GDP that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation.

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Definitions:

Fixed Factors

Elements of production that cannot be easily increased or decreased in the short term, such as land, buildings, or capital equipment.

Weak Axiom

A principle or condition in economics that provides a minimal criterion for consumer choice consistency under certain assumptions.

Profit Maximization

A process or strategy in which a firm's primary objective is to achieve the highest possible profits by adjusting its production and pricing techniques.

Input Increases

A situation where there is an enhancement or augmentation in the resources used for production.