Producing an Amount of GDP Equal to Potential GDP Is

question 53

Multiple Choice

Producing an amount of GDP equal to potential GDP is most consistent with the economy producing

• A)on the production possibilities frontier.
• B)within the production possibilities frontier.
• C)beyond the production possibilities frontier.
• D)either on or within the production possibilities frontier.
• E)either on or beyond the production possibilities frontier.

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Definitions:

Economic Model

A simplified representation or framework that economists use to describe and analyze economic processes, relationships, or phenomena.

Capital Goods

Long-lasting goods purchased and used by businesses to produce goods and services and contribute to their output.

Investment

The allocation of resources, often money, into assets or projects with the expectation of generating profit or income.

Marginal Costs

The increase in the sum total of expenses that comes with the production of one additional unit of a product or service.