The Potential Output of an Economy Is

question 18

Multiple Choice

The potential output of an economy is:

• A)the output level at which inflation is very high.
• B)the output level at which nominal GDP is equal to real GDP.
• C)less than the full-employment rate of output.
• D)the output level at which total unemployment is zero.
• E)also referred to as the natural rate of output.

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Definitions:

Variances

The difference between planned or expected financial outcomes and the actual results, often analyzed in budgeting and cost management.

Performance Reports

Documents that compare actual work performance against planned or expected outcomes.

Variable Cost

A cost that varies, in total, in direct proportion to changes in the level of activity. A variable cost is constant per unit.

Fixed Cost

A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity.