The relationship between real GDP and potential GDP is that
A) real GDP always equals potential GDP.
B) real GDP never equals potential GDP.
C) real GDP fluctuates about potential GDP.
D) real GDP is always below potential GDP.

Question

Quizplus · Accepted Answer

Real GDP fluctuates around potential GDP due to the business cycle, with periods of economic expansion and contraction causing real GDP to rise above or fall below potential GDP.

The Relationship Between Real GDP and Potential GDP Is That