The Idea That Potential GDP Is the Sustainable Upper Limit

question 75

Multiple Choice

The idea that potential GDP is the sustainable upper limit of production means that

• A)real GDP may be temporarily less than potential GDP.
• B)unemployment can only temporarily be zero in a healthy economy.
• C)inflation must always occur in a growing economy.
• D)real GDP may be temporarily larger than potential GDP, but not permanently.
• E)the economy is operating environmentally efficiently.

---

Definitions:

Product Q19S

A designated name or code for a specific product, suggesting a unique item or version offered by a company.

Machine-Hours

A measure of production activity that indicates the amount of time machines are used in the manufacturing process.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process, used as a basis for allocating labor costs to products.

Activity-Based Costing

A method in cost accounting that assigns costs to products and services based on the activities involved in their production or delivery.