The level of real GDP the economy produces at full employment is

Question

Quizplus · Accepted Answer

The correct answer is potential GDP, which represents the level of real GDP an economy is capable of producing at full employment, with all resources utilized efficiently. The other options are incorrect: A) real GDP is the actual level of output produced in the economy at a given time, B) the Lucas level is a concept related to rational expectations and economic modeling, and is not directly related to potential or full-employment GDP, D) the full-employment level of real GDP is a theoretical concept that is seldom reached in reality, but it still represents a meaningful benchmark for economic performance, and E) nominal GDP is a measure of output that includes the effects of inflation, and thus is not directly comparable to real or full-employment GDP.

The Level of Real GDP the Economy Produces at Full