When Potential GDP Increases

question 95

Multiple Choice

When potential GDP increases,

• A)the AS curve shifts rightward.
• B)there is a movement up along the AS curve.
• C)the AS curve shifts leftward.
• D)there is a movement down along the AS curve.
• E)there is neither a movement along nor a shift in the AS curve.

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Definitions:

Profit or Loss

The financial result of business operations, where profit indicates earnings exceed expenses and loss indicates expenses exceed earnings.

Profit-Maximizing Price

The price at which a company can sell its product to maximize its profit, determined by various market dynamics.

Profit-Maximizes

The strategy or aim of a firm to adjust its production and operational parameters to achieve the highest possible profits.

Profit-Maximizing Quantity

The level of production at which a firm achieves the maximum possible profit, where marginal revenue equals marginal cost.