On a graph showing real national income on the vertical axis and time on the horizontal axis,the trend-line would probably be a good approximation of the
A)business cycle.
B)distribution of income.
C)inflation rate.
D)path of potential output.
E)unemployment rate.

Question

Quizplus · Accepted Answer

A trend-line on a graph showing real national income over time would likely track the path of potential output. Potential output represents the level of output an economy can produce when all resources (labor, capital, etc.) are fully employed, but is not affected by cyclical fluctuations in the economy. Therefore, the trend-line would likely represent the long-term growth path of the economy and its potential output over time.

On a Graph Showing Real National Income on the Vertical