High School

Thank you for visiting In Macroland potential output equals 20 trillion and the natural rate of unemployment is 6 percent What must the real GDP be a 18 8. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!

In Macroland, potential output equals 20 trillion, and the natural rate of unemployment is 6 percent. What must the real GDP be?

a) $18.8 trillion
b) $20 trillion
c) $21.2 trillion
d) $22.6 trillion

Answer :

Final answer:

In Macroland, if the economy is at its potential output level with a natural rate of unemployment at 6 percent, real GDP must be 20 trillion dollars, corresponding to option b. So, the correct option is b) $20 trillion

Explanation:

In Macroland, the potential output is given as 20 trillion dollars and this corresponds to the situation where the natural rate of unemployment is 6 percent.

When the economy is operating at its potential output, it is producing at a level consistent with the natural rate of unemployment.

This implies that real Gross Domestic Product (GDP) aligns with potential output when the unemployment rate equals the natural rate of unemployment.

Therefore, in Macroland, if the economy is operating at the potential output level, the real GDP must be 20 trillion dollars, which answers option b.

This level of output is achieved when the economy is utilizing its resources efficiently, with the unemployment rate at its natural level, without generating upward pressure on inflation.

So, the correct option is b) $20 trillion

Thank you for reading the article In Macroland potential output equals 20 trillion and the natural rate of unemployment is 6 percent What must the real GDP be a 18 8. We hope the information provided is useful and helps you understand this topic better. Feel free to explore more helpful content on our website!

Rewritten by : Jeany

Other Questions