Potential GDP was estimated to grow at a rate of 3.2% from 1949-2017 in the United States. Actual GDP in the U.S
A) always grows at a slower rate than potential GDP.
B) always grows at a faster rate than potential GDP.
C) always grows at the same rate as potential GDP.
D) is the same as potential GDP if all firms in the economy were working at capacity.
Answer: D
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A tariff is a
Under a pure system of laissez faire, the government would not do which of the following?
a. prosecute criminals b. provide national defense c. punish those involved in conspiracies to fix prices d. establish minimum wages
Which is more likely to stimulate aggregate demand in a timely manner?
a. a tax cut, because households will increase their consumption by the full amount of their tax reduction b. a tax cut, because disbursement can take place quickly while spending increases are generally spread out over several years c. a spending increase, because disbursement can take place quickly while a tax cut will be spread out over several years d. a spending increase, because it can be easily reversed once the economy has recovered
The principle that "as one input increases while the other inputs are held fixed, output increases at a decreasing rate" is known as the:
A. marginal principle. B. principle of opportunity cost. C. principle of diminishing returns. D. spillover principle.