Question

Consider potential GDP and then choose the statement that is correct. A. The potential GDP line shows the relationship between potential GDP and the quantity of real GDP supplied. B. The potential GDP line is vertical because potential GDP is independent of the price level. C. Along the potential GDP line the money wage rate is constant and the real wage rate rises as the price level rises. D. Potential GDP is illustrated by an​ upward-sloping curve.

Answer 1

Answer:

Option A . The potential GDP line shows the relationship between potential GDP and the quantity of real GDP supplied.

Explanation:

the potential GDP is GDP at full employment level which does not change with price level or wage because the potential output is fixed at its optimum.