Which of the Following Statements About Potential GDP Is FALSE

question 1

Multiple Choice

Which of the following statements about potential GDP is FALSE?

• A) The Fed's goal is to have equilibrium GDP close to potential GDP.
• B) When GDP is at potential, cyclical unemployment is zero.
• C) It occurs when firms are producing at their maximum level of output.
• D) It occurs when firms are producing with a workforce of normal size working normal hours.

---

Definitions:

Wholesalers

Businesses that buy goods in bulk from manufacturers or distributors and then sell them in smaller quantities to retailers or other businesses.

Retailers

Businesses that sell goods or services directly to consumers.

FOB Shipping Point

A term used in shipping indicating that the buyer assumes ownership and the risk of loss of goods once the seller ships the product.

FOB Destination

A shipping term indicating that the seller is responsible for the goods and the shipping cost until the items reach the buyer's specified location.