The natural level of real GDP is that level of
A) real GDP at which the price level will remain constant.
B) nominal GDP at which the price level will remain constant.
C) real GDP at which there is no tendency for inflation to accelerate or decelerate.
D) Both A and C are correct.

Question

Quizplus · Accepted Answer

The natural level of real GDP is the level of real GDP at which there is no tendency for inflation to accelerate or decelerate. This is because at the natural level of real GDP, the aggregate demand for goods and services is equal to the aggregate supply of goods and services.

The Natural Level of Real GDP Is That Level of