Potential real GDP is O A. the level of GDP attained when most firms are producing...

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Question

Potential real GDP is O A. the level of GDP attained when most firms are producing at capacity and unemployment is low. OB. t

Answer 1

Answer #1

Option C.

Potential real GDP can be defined as the level of GDP attained when all firm's are producing at capacity.
We know that real GDP is value of the output produced by an economy by taking into account the effects of inflation.
When this market value of those goods and services are captured during the GDP calculation and if the economy is producing at full capacity, we can say that economy is producing at a potential level.

Answer 2

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