Most economists agree that an automatic mechanism brings the economy back to potential GDP in the long run.In mid-2011,two years after the recession of 2007-2009 had ended,real GDP in the United States
A)had returned to potential GDP.
B)had exceeded potential GDP by 1.5 percent.
C)remained more than 7 percent below potential GDP.
D)was predicted to never return to potential GDP.

Question

Quizplus · Accepted Answer

The question states that the recession ended in 2009, but two years later (in mid-2011), real GDP had not yet returned to potential GDP. Option A can be eliminated. Option B suggests that real GDP was above potential GDP, which is unlikely in a recessionary period. Option D is too extreme and unsupported. Therefore, the best choice is C, which suggests that real GDP was still below potential GDP, indicating that the economy had not fully recovered from the recession after two years.

Most Economists Agree That an Automatic Mechanism Brings the Economy