The level of real GDP in the long run is called
A)potential GDP.
B)short-run GDP.
C)frictional GDP.
D)low-capacity GDP.

Question

Quizplus · Accepted Answer

Potential GDP refers to the level of real GDP that can be sustained in the long run, based on the economy's capacity to produce goods and services. It represents the maximum output that an economy can produce with full employment of its resources, including labor, capital, and technology. Therefore, potential GDP reflects the economy's productive potential and its ability to grow over time.

The Level of Real GDP in the Long Run Is