Which of the Following Does Not Occur When Real GDP

question 85

Multiple Choice

Which of the following does not occur when real GDP rises above potential GDP?

• A)The unemployment rate falls below the natural unemployment rate.
• B)The capacity utilization rate increases.
• C)Firms increase their prices.
• D)The unemployment rate rises above the natural unemployment rate.
• E)Demand increases.

---

Definitions:

Producer Surplus

The variance between the minimum amount producers are prepared to take for a product and the actual payment they get.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing between multiple options.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved, often due to market distortions like taxes or subsidies.

Tax

A compulsory monetary fee or different form of levy placed on a taxpayer by a government body to finance government expenses and various public outlays.