3.Potential real GDP is defined as ________.

A) the quantity of output that the economy can produce when it is at less than potential employment of its resources.

B) the quantity of output that the economy can produce when it is above the natural rate of unemployment.

C) the quantity of output that the economy can produce when it is at full employment of its labor and physical capital.

D) the macro equilibrium

4.The consumption function is a graphical relationship between ________.

A) unemployment and inflation.

B) income and consumer spending

C) prices and consumer spending.

D) borrowing and interest rates.

5.It is important to remember when calculating the spending multiplier to determine government spending (in order to influencing the economy), the ________ in the income-expenditure model is found at the point where the level of GDP/national income equals aggregate expenditure.

A) optimum price

B) micro equilibrium

C) macro equilibrium

D) formula