Question

If the economy's actual GDP is greater than its potential GDP, then there is high unemployment in that economy. Group of answer choices True False

Answer 1

Answer:

FALSE

Explanation: GDP( GROSS DOMESTIC PRODUCT) is a Macroeconomics concept which means the total value of a country's product calculated within a specific time.

REAL GDP: is a measure of the values of a country's products adjusted according to inflation.

POTENTIAL GDP is theoretical concept which is the value of what a country can produce at a constant inflation rate.

When REAL GDP IS GREATER THAN POTENTIAL GDP THE COUNTRY IS AT MORE THAN FULL EMPLOYMENT.

Answer 2

Answer:

False

Explanation:

When the economy falls into recession, the GDP gap is positive, meaning the economy is operating at less than potential (and less than full employment). When the economy experiences an inflationary boom, the GDP gap is negative, meaning the economy is operating at greater than potential (and more than full employment).