As Actual Output Falls Below the Potential Level in the Short

question 99

Multiple Choice

As actual output falls below the potential level in the short run,which of the following is most likely to occur?

• A)More resources will become unemployed.
• B)The price level will increase.
• C)Real GDP will increase.
• D)Nominal GDP will remain constant.
• E)The natural rate of unemployment will fall.

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Definitions:

Monthly Sales

The total revenue generated from the sale of goods or services within a month.

Margin of Safety

The extent to which sales levels can fall before reaching the break-even point, serving as a cushion against financial loss.

Target Profit

The desired net income a firm aims to achieve within a specific time period.

Dollar Sales

The complete income derived from the sale of products or services, measured in units of currency.