If we cannot accurately measure potential GDP,
A)we might overestimate the severity of a recession.
B)we may adopt the wrong fiscal or monetary policy.
C)we will never know the true state of the economy.
D)All of the above are correct.
E)None of the above is correct.

Question

Quizplus · Accepted Answer

If potential GDP is inaccurately measured, it can lead to overestimating recession severity, adopting incorrect policies, and misunderstanding the economy's true state.

If We Cannot Accurately Measure Potential GDP