What is potential GDP and what is the relationship between actual and potential real GDP?
What will be an ideal response?
The quantity of GDP at full employment is called potential GDP. Over the business cycle, real GDP fluctuates around potential GDP. When the unemployment rate is higher than the natural rate, real GDP is less than potential GDP and when the unemployment rate is lower than the natural rate, real GDP exceeds potential GDP.
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Rich people who have more money than they know how to spend
A) no longer act under scarcity. B) no longer need to economize. C) no longer have to choose to advance one project over another. D) will still face a scarcity of their time.
If an economist is talking about international institutions, governments, and NGOs and the policies that oversee international markets, they are talking about
A) international financial architecture. B) the role of the IMF. C) international exchange rate regimes. D) foreign direct investment.
When gold production was low in the 1870s and 1880s, the money supply grew ________ causing ________
A) rapidly; inflation B) rapidly; disinflation C) slowly; deflation D) slowly; disinflation
In Keynes's liquidity preference framework, as the expected return on bonds increases (holding everything else unchanged), the expected return on money ________, causing the demand for ________ to fall
A) falls; bonds B) falls; money C) rises; bonds D) rises; money