The Idea That Potential GDP Is the Sustainable Upper Limit

question 60

Multiple Choice

The idea that potential GDP is the sustainable upper limit of production means that

• A)real GDP may be temporarily larger than potential GDP,but not permanently.
• B)the economy is operating environmentally efficiently.
• C)real GDP may be temporarily less than potential GDP.
• D)inflation must always occur in a growing economy.
• E)unemployment can only temporarily be zero in a healthy economy.

---

Definitions:

Net Cash

The total amount of cash available after all cash inflows and outflows have been accounted for during a specific period.

Financing Activities

Transactions involving obtaining resources from creditors and repaying them, as well as equity transactions with investors.

Net Cash

The amount of cash available after accounting for cash inflows and outflows over a period.

Financing Activities

Transactions related to raising and repaying capital, such as issuing stocks or bonds and paying dividends.