Question

Select TWO facts about real GDP and potential GDP.

1) They both measure the value of goods and services produced in an economy.
2) Real GDP is adjusted for inflation, while potential GDP is not.
3) Real GDP represents the actual output of an economy, while potential GDP represents the maximum output.
4) Real GDP is used to calculate economic growth, while potential GDP is used to measure the economy's productive capacity.

Answer 1

Real GDP measures the actual output of an economy and is adjusted for inflation, while potential GDP represents the maximum output an economy can achieve with full employment of resources.

Step-by-step explanation:

Two facts about real GDP and potential GDP are:

1) They both measure the value of goods and services produced in an economy: Real GDP measures the value of goods and services produced in an economy adjusted for inflation, while potential GDP measures the value of goods and services that an economy is capable of producing at full employment.

2) Real GDP represents the actual output of an economy, while potential GDP represents the maximum output: Real GDP measures the current level of production in an economy, while potential GDP represents the maximum level of production that can be achieved with full employment of resources.

These two measures are important for understanding economic growth and the productive capacity of an economy.