At a Trough in the Business Cycle,the Macroeconomic Equilibrium Is

question 73

Multiple Choice

At a trough in the business cycle,the macroeconomic equilibrium is ________ the level of potential real GDP.

• A)greater than
• B)rising above
• C)equal to
• D)less than
• E)None of the above answers is always correct because the relationship depends on whether the previous phase of the business cycle had been a recession or an expansion.

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Definitions:

Production Function

The relationship between the quantity of inputs a firm uses and the quantity of output it produces.

Inputs

The resources, such as labor, materials, and capital, that are used in the production process to produce goods or services.

Output

The total amount of goods or services produced by a company, industry, or economy within a specified time period.

Total Cost Curve

A graphical representation showing the total cost of producing different levels of output in the short run or long run.