Briefly explain whether you agree with the following argument: Potential GDP is the level of real GDP
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Briefly explain whether you agree with the following argument:
Potential GDP is the level of real GDP attained when all firms are producing at capacity. Firms have the capacity to operate 24 hours per day if they have to, but they rarely do. Therefore, because firms can almost always produce much more output than they actually do, real GDP is almost always well below potential GDP.
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Related Book For
Money, Banking, and the Financial System
ISBN: 978-0134524061
3rd edition
Authors: R. Glenn Hubbard, Anthony Patrick O'Brien
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