Which of the following is a true statement?
a. The concept of potential output might be thought of as the maximum sustainable output of the economy under normal circumstances.
b. Actual output cannot exceed potential output, even during a boom.
c. When the actual rate of unemployment exceeds the natural rate, the actual output of the economy will rise above its potential.
d. Potential output represents the absolute maximum level of production.
A
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Society might argue that there are cases in which it is appropriate to resist price increases in situations where scarcity is serious. Included would be the case of
a. unrestrained monopoly that would otherwise succeed in gouging the public. b. taxes imposed on products capriciously and inappropriately. c. rising prices falling so heavily on the poor that rationing becomes preferable. d. All of the above are correct.
A U.S. resident purchases a bond issued by the Canadian government. If the Canadian dollar appreciates relative to the U.S. dollar over the term of the bond, the U.S. investor will:
A. not see her return affected since exchange rates are flexible. B. see a lower return on her investment as a result. C. see a higher return on her investment as a result. D. none of the answers provided is correct.