A Decrease in Long- Run Real GDP (Potential GDP)would Be

question 29

Multiple Choice

A decrease in long- run real GDP (potential GDP) would be most likely caused by a (an)

• A)increase in factor- utilization rates.
• B)increase in unemployment rates.
• C)decrease in unemployment rates.
• D)decrease in interest rates.
• E)decrease in factor productivity.

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Definitions:

Exchange Rate

The price at which the currency of one country can be exchanged for the currency of another country.

Bushel of Corn

A unit of measure for volumes of dry commodities, used especially for grain, equivalent to approximately 35.24 liters.

Price Support Program

A government policy aimed at maintaining the market price of a good at a certain level to ensure that producers receive a minimum income from their products.

Efficiency Loss

A reduction in optimal resource allocation, often resulting from market distortions such as taxes or monopolies.