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.

Which TWO of the following statements are correct? a. The value of unsold goods that have been produced over the year is not included in GDP. b. In most countries, consumers' expenditure is the biggest item in Gross Domestic Product. c. Government spending on goods and services does not add to Gross Domestic Product. d. Gross domestic product is a stock, not a flow. e. Gross Domestic Product measures the total final spending in the economy, or equivalently the total of incomes generated.

1. Investment is a determining factor of GDP.  A decrease in the supply of available funds (i.e. a decrease in the supply of savings) is predicted to? a. Decrease interest rates, decrease investment towards physical capital and hence decrease GDP. b. Increase interest rates, increase investment towards physical capital and hence decrease GDP. c. Decrease interest rates, decrease investment towards physical capital and hence increase GDP. d. Increase interest rates, decrease investment towards physical capital and hence decrease GDP.

Assume the economy experiences an increase in non-market transactions and a decrease in market transactions. Which of the following is true? A. GDP will increase  B. The productive activity has increased. C. GDP will decrease D. The market value of services will increase.