Suppose Potential GDP Is $100 Billion and the Natural Unemployment

question 88

Multiple Choice

Suppose potential GDP is $100 billion and the natural unemployment rate is 5 percent.If the unemployment rate is 6 percent, then according to Okun's Law real GDP is

• A) $98 billion.
• B) $101 billion.
• C) $99 billion.
• D) $102 billion.
• E) $100 billion.

Understand the principle of increasing opportunity cost and its relationship to the shape of the production possibilities frontier.

Analyze the factors that can cause the production possibility frontier to shift and the significance of such shifts.

Explain the significance of all points on, inside, and outside the production possibilities frontier.

Appreciate the trade-offs involved in allocating resources to produce different combinations of goods.

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Definitions:

Cerebral Cortex

The outer layer of the cerebrum, involved in various high-level functions such as sensation, voluntary muscle movement, thought, reasoning, and memory.

Oriented

The state of being aware of one's own personal identity, place, time, and situation as a measure of cognitive function.

Cerebellum

A part of the brain located at the back of the skull, vital for coordinating movement and balance.

Nystagmus

Involuntary, rapid and repetitive movement of the eyes, which can be horizontal, vertical, or rotary.