Question

1. In an year, the real GDP of an economy a. Always equal to potential GDP b. Must always be less than potential GDP c. Will always be greater than potential GDP because of the tendency of developed nations to incur inflation d. Maybe greater or less than potential GDP

Answer 1

d. Maybe greater or less than potential GDP

Step-by-step explanation:

Real GDP stands for real gross domestic product. It is defined as the measurement of the inflation-adjusted which reflects the quantity of all the goods and the services that is produced in a yean by an economy.

A potential GDP is defined as the level of the output that an economy that can produce at the constant inflation rate.

In a given year the real GDP can be greater than the potential GDP or the can be less than the potential GDP of an economy.

Hence the correct option is (d).