Exhibit 14A-4 Macro AD-AS Model In Exhibit 14A-4, the level of real GDP represented by Y_p: A) would be associated with considerable unemployment. B) indicates that the economy is experiencing zero inflation. C) indicates that the economy is experiencing a recessionary gap. D) is potential real GDP for this economy.

Question

Quizplus · Accepted Answer

Y_p represents potential real GDP, which is the level of output an economy can produce when all resources are fully employed. This is because the point is located on the long-run aggregate supply curve, which represents the maximum output an economy can produce with its available resources.

Exhibit 14A-4 Macro AD-AS Model in Exhibit 14A-4, the Level