Potential output is the amount produced when:
A)firms' and workers' expectations about the price level are realized.
B)the actual price level is higher than the price level expected by workers.
C)firms and workers have the same expectations about the price level.
D)the actual price level remains constant.
E)the actual price level is lower than the price level expected by firms.

Question

Quizplus · Accepted Answer

Potential output is the level of output that an economy can produce at a constant inflation rate, which occurs when firms' and workers' expectations about the price level are realized.

Potential Output Is the Amount Produced When