The level of real GDP in the long run is
A)called potential GDP.
B)affected by changes in the price level.
C)determined solely by aggregate demand.
D)the same as the level of nominal GDP in the long run.

Question

Quizplus · Accepted Answer

The level of real GDP in the long run is called potential GDP. This refers to the maximum amount of output that an economy can produce given its existing level of factors of production, such as capital, labor, and technology. It is not affected by changes in the price level and is not solely determined by aggregate demand. Nominal GDP, on the other hand, refers to the total value of production at current market prices, and is therefore not equivalent to potential GDP.

The Level of Real GDP in the Long Run Is