Potential GDP Is Defined as

question 57

Multiple Choice

Potential GDP is defined as

• A)the maximum of GDP that the economy can produce.
• B)the amount of GDP produced if there is no frictional unemployment.
• C)the level of GDP attained when all firms are producing at capacity.
• D)the amount of GDP produced if there is no structural unemployment.

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Definitions:

Product Costs

These are costs that are directly associated with the creation of a product, including direct materials, direct labor, and manufacturing overhead.

Period Costs

Expenses incurred by a business that are not directly tied to the production process and are charged to the period in which they occur.

Variable Cost

Expenditures that are directly correlated with the volume of production or output level.

Manufacturing Overhead

All manufacturing costs that are not direct materials or direct labor, including expenses related to running the factory.