The growth rates of actual and potential GDP
A)are similar in both the short and long run.
B)are similar in the short run but not the long run.
C)are similar in the long run but not the short run.
D)are different in both the short and long run.

Question

Quizplus · Accepted Answer

The growth rates of actual and potential GDP are similar in the long run but can diverge in the short run due to business cycles, demand fluctuations, and other temporary factors. In the long run, both tend to grow at a rate determined by underlying factors such as technology, labor force growth, and capital accumulation.

The Growth Rates of Actual and Potential GDP