Potential GDP Refers to

question 32

Multiple Choice

Potential GDP refers to

• A)the level of GDP attained when all firms are producing at capacity.
• B)the level of GDP attained by the country with the highest growth in real GDP in a given year.
• C)the difference between the highest level of real GDP per quarter and the lowest level of real GDP per quarter within any given year.
• D)the extent to which real GDP is above or below nominal GDP.

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Definitions:

Competitive Seller

A seller in a competitive market who takes the market price as given and whose output decision does not affect the market price.

Monopolist

An individual or entity that is the sole provider of a particular product or service in the market, giving them the power to influence price and market conditions.

Profit Maximization

The process a firm uses to determine the price and output level that returns the highest profit.

Marginal Cost

The rise in overall expense due to the production of an extra unit of a good or service.