Potential GDP
A)increases as the price level rises.
B)is the level of real GDP when unemployment is zero.
C)increases as the quantity of money in the economy increases.
D)does not vary with the price level.
E)never changes.

Question

Quizplus · Accepted Answer

Potential GDP is the maximum level of real GDP that can be produced by an economy when all its resources are fully employed. It is determined by the economy's resources and technology and does not vary with the price level. Therefore, the correct answer is D.