The Line Showing Potential GDP Is a Vertical Straight Line

question 33

Multiple Choice

The line showing potential GDP is a vertical straight line because

• A) economists are unsure about how to determine potential GDP.
• B) it represents the minimum level of real GDP in a recession.
• C) when nothing else changes, a higher price level has no effect on real GDP.
• D) there is only one level of full employment at any point in time.
• E) the aggregate supply curve is upward sloping.

---

Definitions:

Post-closing Trial Balance

A financial report created after all adjusting and closing entries are made, showing account balances ready for the next accounting period.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, thereby preparing the accounts for the next accounting period.

Correcting Entry

A journal entry made in the accounting records to amend an error or oversight in previously recorded transactions.

Accounts Payable

Financial obligations a company has to its suppliers, recorded as liabilities on the business’s financial statement.