Exhibit 14A-4 Macro AD-AS Model

-In Exhibit 14A-4,the level of real GDP represented by Yp:
A) would be associated with considerable unemployment.
B) indicates that the economy is experiencing zero inflation.
C) indicates that the economy is experiencing a recessionary gap.
D) is potential real GDP for this economy.

Question

Exhibit 14A-4 Macro AD-AS Model
 
-In Exhibit 14A-4,the level of real GDP represented by Yp:
A) would be associated with considerable unemployment. 
B) indicates that the economy is experiencing zero inflation. 
C) indicates that the economy is experiencing a recessionary gap. 
D) is potential real GDP for this economy.

Quizplus · Accepted Answer

Yp represents potential real GDP, which is the level of output that an economy can produce when operating at full capacity with all resources being utilized effectively. It does not directly indicate the level of employment or inflation, but it is the maximum sustainable level of output in the long run.