According to the text, which of the following can be used to approximate potential output?
i. Assume a perfectly smooth trend is passing through the quarter-to-quarter movements in the real GDP.
ii. Survey leading economists.
iii. Gather current data from statistical agencies, such as the Bureau of Economic Analysis.
A) i only
B) ii only
C) ii and iii
D) i and ii
E) iii only

Question

Quizplus · Accepted Answer

Approximating potential output often involves analyzing long-term trends in economic data rather than relying on surveys or current data snapshots. Assuming a perfectly smooth trend through the quarter-to-quarter movements in real GDP is a method used to estimate potential output by smoothing out the short-term fluctuations and focusing on the underlying long-term growth trend.

According to the Text, Which of the Following Can Be