The figure below shows the relationship between an economy's potential output,price level,and real GDP.According to those who favor an active approach to policy,the economy will end up at _____when it attains the potential output level.

Question

Quizplus · Accepted Answer

Those who favor an active approach to policy believe that the economy should be guided towards achieving its potential output level. At point B, the economy has achieved its potential output level and the price level is stable. Therefore, the economy will end up at point B when it attains the potential output level.

The Figure Below Shows the Relationship Between an Economy's Potential