If the Actual GDP Is Less Than Potential GDP

question 47

Multiple Choice

If the actual GDP is less than potential GDP:

• A)potential GDP will fall.
• B)the price level will rise.
• C)investment spending will fall.
• D)the actual unemployment rate will be higher than the natural unemployment rate.

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Definitions:

Total Costs

The sum of all expenses incurred in the production of goods or services, including fixed and variable costs.

Variable Costs

Costs that vary directly with the level of production or output, for example, materials and labor costs used in manufacturing.

Accounting Profit

The net income of a company calculated by deducting all operational and overhead costs from total revenue, according to generally accepted accounting principles.

Accounting Profit

Accounting profit is the net income for a company calculated by subtracting total expenses from total revenues, according to generally accepted accounting principles.