In the macroeconomic long run,
A) output always is above potential GDP.
B) there is full employment and real GDP is equal to potential GDP.
C) there is full employment with no unemployment.
D) GDP always is below potential GDP.

Question

Quizplus · Accepted Answer

In the macroeconomic long run, the economy tends towards full employment and potential GDP. This means that all resources (including labor) are utilized, and there is no cyclical unemployment. Real GDP is equal to potential GDP, which represents the maximum level of output an economy can produce with its existing resources and technology. Therefore, option B is the correct answer.

In the Macroeconomic Long Run