Defining $Y _ { t }$ as current output, $\bar { Y } _ { t }$
As potential output, and $\tilde { Y } _ { t }$
As short-run fluctuations, which of the following equations is correct?
A) $Y _ { t } = \tilde { Y } _ { t } - \bar { Y } _ { t }$
B) $\tilde { Y } _ { t } = Y _ { t } - \bar { Y } _ { t }$
C) $\tilde { Y } _ { t } = \bar { Y } _ { t }$
D) $\bar { Y } _ { t } = 0$
E) $\tilde { Y } _ { t } = \frac { Y _ { t } + \bar { Y } _ { t } } { \bar { Y } _ { t } }$

Question

Quizplus · Accepted Answer

$\tilde { Y } _ { t } = Y _ { t } - \bar { Y } _ { t }$ is the correct equation because it defines short-run fluctuations as the difference between current output and potential output.

Defining YtY _ { t }Yt​ As Current Output Yˉt\bar { Y } _ { t }Yˉt​

Defining $Y _ { t }$ As Current Output $\bar { Y } _ { t }$