The Relationship Between Real GDP and Potential GDP Over the Business

question 184

Multiple Choice

The relationship between real GDP and potential GDP over the business cycle can be best summarized by which of the following statements?

• A)Real GDP fluctuates around potential GDP.
• B)Real GDP is always equal to potential GDP.
• C)Real GDP cannot be greater than potential GDP.
• D)Real GDP cannot be less than potential GDP.
• E)Real GDP cannot be equal to potential GDP.

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Definitions:

Net Markups

The amount by which the price of a security is increased above its initial offering price to the public, after deducting any fees or commissions.

Net Markdowns

The reduction in the selling price of goods, net of any subsequent increases in price, affecting the gross margin of a retail operation.

Dollar-value LIFO Retail Method

An accounting method that adjusts inventory levels using the last-in, first-out (LIFO) principle, measured in dollar value, particularly for the retail industry.

Price Index

A statistical measure that shows changes in the price level of a basket of goods and services over a period of time.