QUESTION 4 Why is GDP sometimes higher than potential GDP and other times lower than potential GDP? O Because GDP is affected by the business cycle in the short run and potential GDP is not O Because the amount of capital (K) and labor (L) available in the macroeconomy changes slowly over time O Unlike the microeconomic production possibilities frontier (PPF), actual output (GDP) in the short run can be produced in the region beyond the macroeconomic PPF (which is infeasible for individual firms and markets) O All of the above
QUESTION 4 Why is GDP sometimes higher than potential GDP and other times lower than potential GDP? O Because GDP is affected by the business cycle in the short run and potential GDP is not O Because the amount of capital (K) and labor (L) available in the macroeconomy changes slowly over time O Unlike the microeconomic production possibilities frontier (PPF), actual output (GDP) in the short run can be produced in the region beyond the macroeconomic PPF (which is infeasible for individual firms and markets) O All of the above
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
what is the correct answer for number 4
Transcribed Image Text:Mail Microsoft Word
Question Completion Status:
10 20
4 50 6
8
O Potential GDP has increased more than GDP
It doesn't matter because they are not related
O GDP has increased more than potential GDP
They have increased about the same
QUESTION 3
ENGL102
19
ECON 202
False
9 100 110 120
Potential GDP fluctuates less and grows more smoothly over time than GDP.
O True
O False
NY Times
WSJ WSJ
130 140 150 160 17
18
QUESTION 4
Why is GDP sometimes higher than potential GDP and other times lower than potential GDP?
O Because GDP is affected by the business cycle in the short run and potential GDP is not
O Because the amount of capital (K) and labor (L) available in the macroeconomy changes slowly over time
O Unlike the microeconomic production possibilities frontier (PPF), actual output (GDP) in the short run can be produced in the region beyond the macroeconomic PPF (which is
infeasible for individual firms and markets)
O All of the above
QUESTION 5
Actual GDP is estimated far into the future (beyond 2022) because it depends on long-run forecasts of things like population growth and technology trends, but potential GDP stops in
2022 because goods and services in the future have not been produced and sold yet.
O True
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