If Real GDP Is Below Potential GDP

question 56

Multiple Choice

If real GDP is below potential GDP,

• A)long-run equilibrium will be achieved once the aggregate demand curve shifts to the right.
• B)the economy is in a short-run equilibrium.
• C)long-run equilibrium will be achieved once inflation has stopped declining.
• D)the economy is in a medium-run equilibrium.
• E)long-run equilibrium will be achieved once prices have stopped declining.

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Definitions:

Fixed and Variable

Terms referring to costs within a business, where fixed costs do not change with the level of production or sales, while variable costs vary directly with the level of production.

Merchandising Value Chains

The sequence of activities and processes a product undergoes from production to being sold to the end consumer in retail.

Service Firm

A business that primarily offers intangible products, such as expertise or services, rather than physical goods.

Overhead Cost

Overhead Cost comprises indirect expenses related to the overall operations of a business, including costs not directly tied to specific products or services.