'Potential GDP' Is Defined as The

question 52

Multiple Choice

'Potential GDP' is defined as the:

• A)maximum level of GDP that the economy can produce.
• B)amount of GDP produced if there is a zero rate of unemployment.
• C)level of GDP attained when all firms are producing at capacity.
• D)amount of GDP produced when the economy is in equilibrium.

---

Definitions:

Profit Margin

The percentage of revenue that remains as income after all operating expenses, interest, taxes, and preferred stock dividends have been deducted from total revenue.

Fixed Asset Capacity

The maximum production or service level that a company can sustain with its current fixed assets, such as machinery and equipment.

Current Sales

The total recorded sales of a company within the current financial period.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without increasing its leverage or equity.