Which of the Following About Potential GDP Is True

question 91

Multiple Choice

Which of the following about potential GDP is true?

• A) During a recession, actual GDP will exceed potential GDP.
• B) Actual GDP cannot exceed potential GDP, even for short periods.
• C) Actual output may be either above or below potential output depending on how fully resources are utilized.
• D) The economy's potential output is the maximum output that could be achieved temporarily during a time of economic boom.

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Definitions:

Scarce Factor Of Production

An input required for the production process that is in limited supply, potentially constraining output.

Monopoly

A market framework in which there is only one seller offering a distinctive product to the market.

Marginal Revenue

The extra revenue earned by selling an additional unit of a product or service.

Marginal Cost

The added financial burden incurred by manufacturing one more good or service unit.