Question : 11) Suppose that Australia has fully employed all of its : 1240960

11) Suppose that Australia has fully employed all of its resources. This situation means that Australia

A) is operating at its potential GDP.

B) is growing at a faster rate than the United States.

C) has a negative Okun Gap.

D) has a positive Lucas Wedge.

E) is experiencing zero unemployment.

12) If the economy is fully employed, which of the following is true?

A) The price level equals 100.

B) Real and nominal GDP are equal.

C) Real and potential GDP are equal.

D) The unemployment rate is zero.

E) Real GDP cannot increase.

13) Potential GDP is the level of

A) real GDP that the economy would produce if it was at full employment.

B) nominal GDP that the economy would produce if it was at full employment.

C) real GDP that the economy would produce if there was no inflation.

D) nominal GDP that the economy would produce if there was no inflation.

E) real GDP that the economy would produce if there was no unemployment.

14) Potential GDP is

A) equal to the maximum amount of goods and services that can be produced at any given time.

B) another name for real GDP.

C) the level of output produced when the economy is fully employed.

D) a measure of the short term fluctuations in real GDP.

E) another name for nominal GDP.

15) Potential GDP

A) is the same as real GDP.

B) is the same as nominal GDP.

C) is another name for the Lucas Wedge.

D) is the level of output produced when the economy is fully employed.

E) shows that the Okun Gap vastly exceeds the Lucas Wedge.

16) If New Zealand is operating at potential GDP, which of the following is true?

i)New Zealand only has frictional and structural unemployment.

ii)There is no inflation in New Zealand.

iii)New Zealand has positive net exports.

A) i, ii and iii

B) i only

C) i and ii

D) i and iii

E) ii only

17) The idea that potential GDP is the sustainable upper limit of production means that

A) real GDP may be temporarily larger than potential GDP, but not permanently.

B) the economy is operating environmentally efficiently.

C) real GDP may be temporarily less than potential GDP.

D) inflation must always occur in a growing economy.

E) unemployment can only temporarily be zero in a healthy economy.

18) Suppose an economist stated that Brazil had achieved its potential GDP 2013. This would imply that at this level of real GDP, Brazil experienced

A) peak in its business cycle in 2013.

B) unemployment equal to zero.

C) inflation equal to zero.

D) full employment.

E) a negative Okun Gap.

19) Suppose Germany’s economy is experiencing full employment. This means that, in Germany,

A) the unemployment rate is equal to zero.

B) real GDP is equal to potential GDP.

C) real GDP is greater than potential GDP.

D) potential GDP is greater than real GDP.

E) real GDP equals nominal GDP.

20) At full employment, actual ________ equals ________.

A) nominal GDP; potential GDP

B) real GDP; potential GDP

C) real GDP; nominal GDP

D) potential GDP; nominal GDP

E) unemployment; zero