Which of the following is true?
A)Aggregate supply is another name for potential GDP.
B)Potential GDP increases as the price level increases.
C)At full employment,aggregate supply is equal to potential GDP.
D)Potential GDP decreases as the price level increases.
E)The potential GDP line has a negative slope.

Question

Quizplus · Accepted Answer

At full employment, all available resources in the economy are being utilized, which means that aggregate supply is at its maximum potential. This is equivalent to potential GDP. Therefore, at full employment, aggregate supply is equal to potential GDP. The other options are incorrect.

Which of the Following Is True