In Any Year, Real GDP

question 383

Multiple Choice

In any year, real GDP

• A) must always be less than potential GDP.
• B) might be greater or less than potential GDP.
• C) will be greater than potential GDP if the inflation rate is positive.
• D) always equals potential GDP.

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Definitions:

Demand Curve

A visual chart that illustrates how the demand quantity of a product or service correlates with its price over a specific time frame.

Socially Efficient

An allocation of resources that results in the maximum possible economic benefit for society.

Marginal Revenue

The extra revenue generated from the sale of an additional unit of a product or service.

Deadweight Loss

The reduction in total surplus that results from a market distortion, such as a tax, subsidy, or price control.