Potential output
A)is defined as the level of real output that the economy could produce at high rates of resource utilization.
B)only occurs when both the unemployment rate and inflation rate are zero.
C)can be estimated by choosing benchmark measures of high resource utilization.
D)Both a and c

Question

Quizplus · Accepted Answer

Potential output is defined as the level of real output that the economy could produce at high rates of resource utilization, which means that high resource utilization is a benchmark measure for estimating potential output. Therefore, both options A and C are correct. Option B is incorrect as potential output can still exist even if there are some levels of unemployment and inflation, but it represents what an economy could produce if resources were used efficiently.

Potential Output