Practice: Section 13.3 Score: 1 of 5 pts Save 3 of 5 Question 3: Macroeconomic E

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Practice: Section 13.3 Score: 1 of 5 pts Save 3 of 5 Question 3: Macroeconomic Eq-Long and Short Run 5 Question Help Consider th e data in the following table for the years 1969 and 1970 (the values for real GDP are in 2009 dollars): Year 1969 1970 Actual Real GDP $4.71 trillion $4.72 trillion Potential Real GDP $4.63 trillion $4.79 trillion Unemployment Rate 3.5% 4.9% Sources:U.S. Bureau of Labor Statistics; and U.S. Bureau of Economic Analysis Click to select your answer and then click Check Answer parts remaining Clear Al

Explanation / Answer

Choice A

Potential GDP is the level of production of goods and services that the economy can produce if it's workforce is fully employed and its capital is fully utilised. Actual GDP is the actual output of goods and services. If actual exceeds potential then it is an inflationary gap.

Choice C is wrong because this is an inflationary gap not a recessionary gap, where real output will be less than potential output.

Choice D is wrong because a supply shock would shift the SRAS to the left and cause a fall in the output.

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