If the economy is at long run equilibrium then
A) real GDP equals potential GDP.
B) nominal GDP equals potential GDP.
C) real GDP cannot be equal to potential GDP.
D) real GDP can be greater than, less than, or equal to potential GDP.

Question

Quizplus · Accepted Answer

Real GDP equals potential GDP in long run equilibrium, indicating that the economy is operating at its full capacity without any inflationary or recessionary gaps.

If the Economy Is at Long Run Equilibrium Then