The level of output that the economy would produce if all prices, including nominal wages, were fully flexible is called:
A) real GDP.
B) Keynesian GDP.
C) structural GDP.
D) potential GDP.

Question

Quizplus · Accepted Answer

The level of output that the economy would produce if all prices, including nominal wages, were fully flexible is called potential GDP. This level of output is achievable only if all resources in the economy are utilized efficiently and without any frictions or rigidities.

The Level of Output That the Economy Would Produce If