When the Actual GDP Equals the Full-Employment Level of GDP

question 49

Multiple Choice

When the actual GDP equals the full-employment level of GDP, the

• A) economy is in long-run equilibrium.
• B) price level must be rising.
• C) expected inflation must be zero.
• D) aggregate supply curve is not constrained by the scarcity of resources.

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Definitions:

Economic Losses

Occur when a company's total costs exceed its total revenues, indicating a negative outcome from business operations.

Representative Firm

A representative firm is a hypothetical entity in economic models used to represent the typical characteristics of firms within a particular industry or market.

Breaking Even

Breaking even refers to a financial situation where total costs and total revenues are equal, resulting in no net loss or gain for the business.

Resource Prices

The costs associated with acquiring the inputs needed for production, such as raw materials, labor, and capital.