In any year, real GDP

Question

Quizplus · Accepted Answer

Real GDP can be greater than, less than, or equal to potential GDP, depending on various factors such as the level of business investment, consumer spending, and government policies. In the short run, real GDP can exceed potential GDP due to factors such as unexpected increases in aggregate demand or technological innovations. However, in the long run, the economy tends to move toward potential GDP, which represents its maximum sustainable output level.

In Any Year, Real GDP