In Macroland, Potential Output Equals $100 Trillion and the Natural

question 107

Multiple Choice

In Macroland, potential output equals $100 trillion and the natural rate of unemployment is 4 percent. If the actual unemployment rate is 5 percent, then real GDP must be:

• A) $98 trillion.
• B) $99 trillion.
• C) $101 trillion.
• D) $102 trillion.

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Definitions:

Manufacture

The process of producing goods through the use of machinery, tools, and labor, often on a large scale.

Productivity Growth

An increase in the efficiency of production, often measured by the ratio of output to inputs over a specific period.

U.S. Economy

The economic system of the United States, characterized by a mixed economy that includes private enterprise alongside limited government intervention.

Labor Productivity

A measure of economic performance that compares the amount of goods and services produced (output) with the number of hours worked.