Must do

Question 1

State two conditions/assumptions necessary when drawing a PPC diagram.

Answer 1

Fixed resources and technology
Efficient use of resources

Question 2

Define potential output.

Answer 2

The level of output the economy can produce when all resources are fully employed — corresponds to full employment output (Yf).

Question 3

Define economic growth.

Question 4

Define actual growth.

Answer 4

An increase in real GDP resulting from better use of existing resources.

Question 5

Define actual output.

Answer 5

The current level of real output (real GDP) that the economy is producing.