Potential GDP is an estimate of the economy's ability to produce goods and services if the
A)labor force is fully employed.
B)price level is stable.
C)trade balance is zero.
D)federal budget is balanced.

Question

Quizplus · Accepted Answer

Potential GDP is based on the assumption that all available labor resources are fully employed, regardless of the price level, trade balance, or federal budget. Therefore, the correct answer is A.

Potential GDP Is an Estimate of the Economy's Ability to Produce