Potential GDP Is

question 75

Multiple Choice

Potential GDP is

• A) another name for real GDP.
• B) always different from real GDP.
• C) the level of GDP not adjusted for price changes.
• D) the maximum amount of GDP that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation.

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Definitions:

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to purchase at various prices.

Individual Demand Curves

Graphical representations showing the relationship between the price of a good and the quantity demanded by an individual consumer, holding other factors constant.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they can be used by anyone and one person's use does not reduce its availability to others.

Free-Rider Problem

A situation where individuals consume a public good without contributing to its cost, benefiting from the good without paying for it.