Potential GDP is the level of output produced when the unemployment rate is

Question

Quizplus · Accepted Answer

Potential GDP is the level of output that an economy can produce when it is using all its factors of production at their normal levels. This occurs when unemployment is equal to the natural unemployment rate, which is the rate of unemployment that is consistent with full utilization of an economy's resources. Therefore, the answer is choice letter A, when unemployment is equal to the natural unemployment rate.

Potential GDP Is the Level of Output Produced When the Unemployment