Potential GDP refers to a. the level of output that an economy can produce when all resources (land, labor, capital, and entrepreneurial ability) are fully employed. b. the level of output that an economy can produce when all resources (land, labor, capital, and entrepreneurial ability) are not fully employed. c. an abstract conception developed by economists. d. an unreal expectation of the government.

Potential GDP refers to a. the level of output that an economy can produce when all resources (land, labor, capital, and entrepreneurial ability) are fully employed. b. the level of output that an economy can produce when all resources (land, labor, capital, and entrepreneurial ability) are not fully employed. c. an abstract conception developed by economists. d. an unreal expectation of the government.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter19: Measuring Economic Performance

Section: Chapter Questions

Problem 11P

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1. The maximum amount of production that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation is called A) real GDP. B) nominal GDP. C) actual GDP. D) potential GDP. 2. Potential GDP is A) the maximum GDP that an economy actually achieves throughout its entire history. B) the level of GDP achieved during periods when 100 percent of the labor force is employed. C) a goal that can never be achieved by the economy. D) the maximum amount of GDP that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation. 3. The relationship between real GDP and potential GDP is that A) real GDP always equals potential GDP. B) real GDP never equals potential GDP. C) real GDP fluctuates about potential GDP. D) real GDP is always below potential GDP. 4. The income approach to measuring GDP sums together A) compensation of employees, rental income, corporate profits, net…
True or false?Part A. Government production accounts for about half of all GDP in the United States. Part B.Gross domestic product is the money value of all final goods and services produced in an economy in a year.
Which of the following statements is TRUE? Select one: a. Potential GDP is the same as real GDP. b. Real GDP fluctuates around potential GDP. c. When all of the economy's resources are fully employed, the value of production is called real GDP. d. Potential GDP fluctuates around real GDP.
The production of goods and services valued at current prices is called real GDP. Select one: a. False b. True
The financial sector of a country is very small. Local banks refuse many clients because they do not have enough capacity. As a result, some households put their savings in banks of neighboring countries. Which of the following is most likely ? Select one: a. GDP is greater than GNP. b. GDP and GNP are equal c. GNP is greater than GDP d. It is not possible to say anything on GDP and GNP
Social Security payments are a. included in GDP because they represent potential consumption. b. excluded from GDP because they do not reflect the economy's production. c. excluded from GDP because they are not private pensions. d. included in GDP because they represent current income.
Fill in the blank using the number that corresponds to the correct word or phrase: 1. 2 percent 2. fall 3. production possibilities curve 4. real GDP per person 5. greater 6. right 7. rise 8. An economy's output per capita equals We use as a gauge of an economy's material standard of living If, for example, population increases by 2%, then real GDP would have to rise by to maintain the current level of output per capita. If real GDP rises by less than 2%, output per capita will . If real GDP rises by more than 2%, output per capita will For economic growth to translate into a higher standard of living on average, economic growth must be than population growth Economic growth can be defined as the process through which an economy achieves an outward shift in its To produce its potential level of output, an economy must operate on its In the framework of the macroeconomic model of aggregate demand and aggregate supply, we show in the long-run aggregate supply curve. economic growth as a…
1) GDP is a better indicator of economic growth and welfare than GNP because a) indicates income from goods/services that are available in the country.b) it is always larger than the GNP and includes government services.c) the entrepreneurs' effort of combination of other factors of production are included.d) all factor of production's income are accounted for. 2) To increase your productivity, you must a. use the latest equipment.b. increase your marginal price. c. hone your skills. d. be good looking. a) a and c.b) b and d.c) a and b 3) The Malthusian population trap tell us that a) that there is a stage that income and population stop to grow.b) increased population has nothing to do with economic growth.c) There is point in which population is not contributing to labor increases.d) trade routes of people is responsible for population growth. .e) there is inequality in income there fore population is affected
The curve in the figure at right will shift to the right when A. the proportion of the population that is elderly increases. B. population falls. C. the price level falls. D. labor productivity increases. Real GDP per YearPrice Level
Multiplying the volume of each good produced by the price of each that obtains in the year of production, and summing over all the goods will yield? Select one: a. nominal GDP. b. the GDP volume index. c. the consumer price index. d. the GDP deflator. e. real GDP.
The omission of household production from GDP means that GDP total production and the growth rate of total production. A. overestimates; underestimates B. underestimates; underestimates C. underestimates; overestimates D. overestimates; overestimates E. underestimates; does not bias
Describe the economic cycle. Give specific details and examples.

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	a. the level of output that an economy can produce when all resources (land, labor, capital, and entrepreneurial ability) are fully employed.
	b. the level of output that an economy can produce when all resources (land, labor, capital, and entrepreneurial ability) are not fully employed.
	c. an abstract conception developed by economists.
	d. an unreal expectation of the government.