When the Economy Is at Its Potential Output Level,which of the Following

question 76

Multiple Choice

When the economy is at its potential output level,which of the following is not true?

• A)Firms' and workers' expectations about the price level are realized.
• B)The nominal wage is a good measure of the expected real wage.
• C)The unemployment rate is about 4 to 6 percent.
• D)The economy is producing the maximum output it can produce in short periods of time; however,such a fast pace could not be maintained for long.
• E)The actual price level equals the expected price level.

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Definitions:

Break-even Point

The point at which total costs and total income are equal, so there is no loss or gain, and the business is just covering all its costs with its sales revenue.