Q6. Which of the following statements is incorrect regarding the potential GDP line?

a.It is a vertical line

b.It assumes less than full employment of its labor and physical capital.

c.It refers to the quantity of output the economy can produce

Q7. The income-expenditure model illustrates when what is out of balance or inefficient?

a.net exports

b.levels of output or national income

c.price levels

Q8. Considering the Keynesian Cross Diagram, the income=expenditure line is also called the ________.

a.macroeconomic equilibrium

b.45-degree line

c.potential GDP line