Potential GDP Is

question 79

Multiple Choice

Potential GDP is

• A) the same as real GDP.
• B) the same as nominal GDP.
• C) another name for the Lucas wedge.
• D) the level of output produced when the economy is fully employed.
• E) shows that the Okun gap vastly exceeds the Lucas wedge.

---

Definitions:

LIFO Retail Inventory Method

An inventory costing method that assumes the last items placed in inventory are sold first, not necessarily reflecting the actual physical flow of merchandise.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated as the beginning inventory plus purchases minus cost of goods sold.

Net Markups

The difference between the cost of a good or service and its selling price, after accounting for discounts, allowances, or returns.

Net Markdowns

The reduction in the original selling price of merchandise minus any markdown cancellations.