Business cycles are fluctuations of potential GDP around real GDP.

Name: Business cycles are fluctuations of potential GDP around real GDP.
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Business cycles are fluctuations of real GDP around potential GDP, not the other way around. Potential GDP is the level of GDP that the economy would produce if all resources were fully employed, while real GDP is the actual level of GDP produced. Business cycles represent the ups and downs of economic activity around this potential level.

Business Cycles Are Fluctuations of Potential GDP Around Real GDP