Which of the Following Is False About Potential Output

question 65

Multiple Choice

Which of the following is false about potential output?

• A) It is the level of output an economy can achieve when labor is employed at its natural level.
• B) It is the long run output level that guarantees price stability.
• C) It is also called the natural level of real GDP.
• D) If a country is producing its potential output, then it is producing at a point on its production possibilities frontier.

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