In the short run, real GDP can be greater than or less than potential GDP because in the short run the
A)quantity of capital is fixed.
B)money wage rate is fixed.
C)price level is fixed.
D)full- employment level of employment is fixed.

Question

Quizplus · Accepted Answer

In the short run, the money wage rate is often fixed due to contracts and wage agreements, which can lead to real GDP deviating from potential GDP as firms adjust production based on demand and price changes.

In the Short Run, Real GDP Can Be Greater Than