If We Cannot Accurately Measure Potential GDP

question 13

Multiple Choice

If we cannot accurately measure potential GDP,

• A)we might overestimate the severity of a recession.
• B)we may adopt the wrong fiscal or monetary policy.
• C)we will never know the true state of the economy.
• D)All of the above are correct.
• E)None of the above is correct.

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Definitions:

Attendance

The act of being present at a location or event, often tracked for purposes such as education, employment, or participation in activities.

Number

An entity employed in mathematics for counting, measuring, and naming purposes.

Persons

Human individuals or groups considered collectively, especially in legal or formal contexts.

Long-Run Equilibrium

A state in which all factors of production and costs are variable, allowing firms to make adjustments to achieve the optimal scale of operation, leading to zero economic profit in competitive markets.