The level of real GDP in the long run is calledQuestion 8Answera.low-capacity GDP.b.potential GDP.c.frictional GDP.d.short-run GDP.
Question
The level of real GDP in the long run is called
Question 8
Answer:
- a. low-capacity GDP.
- b. potential GDP.
- c. frictional GDP.
- d. short-run GDP.
Solution
Question Analysis
The question asks for the term that describes the level of real GDP in the long run.
Relevant Concepts
In economics, the level of real GDP that an economy can sustain over the long term without leading to inflation is known as potential GDP. This reflects the maximum output an economy can produce when utilizing its resources fully.
Conclusion
Among the options provided:
- Low-capacity GDP does not represent a standard economic term.
- Potential GDP is the correct term for the long-run GDP level.
- Frictional GDP is not a recognized term either.
- Short-run GDP contrasts with long-run GDP, focusing on current output levels.
Final Answer
b. potential GDP
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