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 interest, proprietors' income, subsidies paid by the government, indirect taxes paid, and depreciation. B) compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and depreciation and subtracts subsidies paid by the government. C) the sales of each firm in the economy. D) the costs of each firm in the economy and then subtracts indirect business taxes and depreciation.
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 interest, proprietors' income, subsidies paid by the government, indirect taxes paid, and
B) compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and depreciation and subtracts subsidies paid by the government.
C) the sales of each firm in the economy.
D) the costs of each firm in the economy and then subtracts indirect business taxes and depreciation.
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