Potential GDP

question 174

Multiple Choice

Potential GDP

• A) measures the actual production from year to year.
• B) measures the maximum amount of production that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation.
• C) is cyclical.
• D) Both answers A and C are correct.

---

Definitions:

Salvage Value

The estimated residual value of an asset at the end of its useful life, reflecting what it could be sold for or scrapped for parts.

Journal Entries

Journal entries are the basic means of recording financial transactions in the accounting system, consisting of debits and credits.

Double-declining-balance Method

An accelerated depreciation method that doubles the regular depreciation rate, allowing faster write-off of asset value.

Straight-line Method

Straight-line Method is a depreciation technique that allocates an equal amount of depreciation expense for an asset over its useful life, representing a consistent annual charge.