Output fluctuations are defined as:
A) the amount of output where inflation is about 2 percent.
B) what an economy produces when it is at capacity.
C) the percentage difference between current output and potential output.
D) the amount of total output if all inputs were utilized at their long-run sustainable levels.
E) the amount of output where unemployment is zero.

Question

Quizplus · Accepted Answer

Output fluctuations refer to the difference between the actual output and potential output of an economy. This difference is measured as a percentage and reflects the degree to which an economy is operating below or above its full potential. Therefore, option C, "the percentage difference between current output and potential output", is the correct definition of output fluctuations.

Output Fluctuations Are Defined As