Using statistical methods the Federal Reserve creates a measure of what the level of the real GDP would be if the economy were fully utilizing its economic resources of capital, labor and entrepreneurial talent in an efficient manner and this is referred to as:
A) GDP gap
B) Potential GDP
C) Potential employment
D) All of the above
E) None of the above

Question

Quizplus · Accepted Answer

Potential GDP refers to the level of output that an economy can achieve when it is fully utilizing its resources, including capital, labor, and entrepreneurial talent, in an efficient manner. This concept is used to assess the productive capacity of an economy and to guide monetary and fiscal policy decisions.

Using Statistical Methods the Federal Reserve Creates a Measure of What