Potential GDP Is

question 69

Multiple Choice

Potential GDP is:

• A)minimum amount of output that can be produced given the labor force, capital stock, and technology.
• B)maximum amount of output that can be produced given the labor force, capital stock, and technology.
• C)varies over the business cycle.
• D)none of the above.

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Definitions:

Short-Run Supply Curve

A graph that shows the relationship between the price of a good and the quantity of that good supplied by producers over a short period, where some inputs are fixed.

Long-Run Supply Curve

A graphical representation showing how the quantity supplied of a good or service varies with price over a long period, when all inputs can be varied.

Marginal Cost

The supplementary cost associated with making an additional unit of a product or service.

Marginal Revenue

The additional income received from selling one more unit of a good or service; it is an important concept in determining optimal output levels.