Explain the relationship between potential GDP and real GDP in ...

[Arii_bell]

Explain the relationship between potential GDP and real GDP in the United States since the early 1960s. You do not need to tell what happened during any specific year; just describe the general relationship.
 
  What will be an ideal response?

Question 2

The implicit rental rate for capital includes the
 
  A) total value of a piece of capital equipment.
  B) interest income forgone by purchasing the piece of capital equipment.
  C) firm's normal profit.
  D) amount paid for the use of a piece of capital equipment owned by someone else.

[vickybb89]

Answer to Question 1

Potential GDP has grown over the period, albeit at a slower rate over the past 3 decades, while the level of real GDP has fluctuated around potential GDP throughout.

Answer to Question 2

B

[Arii_bell]

Thank you

[vickybb89]

Happy to help you