The Level of Potential GDP

question 7

Multiple Choice

The level of potential GDP

• A) increases when the inflation rate rises.
• B) rises and falls with the business cycle.
• C) determines the location of the long-run aggregate supply curve.
• D) changes when cyclical unemployment changes.

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Definitions:

Direct Foreign Investment

Funding provided by an individual or a company based in one country to start or acquire business operations and assets in another country.

GDP

Gross Domestic Product, a measure of the economic performance of a country, calculated by adding up all market values of goods and services produced within the country in a year.

Private Capital Flows

Financial resources transferred between countries by private sector entities through direct investments, portfolio investments, and other forms of capital movements.

Direct Foreign Investment

An individual or company from one nation investing in business interests or assets in a different country, which includes starting up operations or buying business holdings.