Potential GDP is the maximum amount of real GDP that an economy can produce when it is at full employment of all resources. It represents the level of output that the economy could achieve if all resources are used efficiently, and there is no cyclical unemployment.

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Potential GDP Is

Question 126

Multiple Choice

Potential GDP is

A) the amount of real GDP that the economy would produce if all unemployment was cyclical unemployment.
B) the amount of real GDP that the economy would produce if the unemployment rate was zero.
C) another name for real GDP.
D) the amount of real GDP that the economy would produce if it were at full employment of all resources.
E) the value of the maximum amount of output that can be produced at any given time.

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