Potential output is
A. the level of real GDP that exists when the economy is experiencing only frictional and cyclical unemployment.
B. the level of real GDP that exists when the quantity of labor supplied is equal to the quantity of labor demanded.
C. the level of real GDP that exists when the actual rate of unemployment is zero.
D. the level of real GDP that exists when the economy is experiencing only cyclical and structural unemployment.
Ans: B. the level of real GDP that exists when the quantity of labor supplied is equal to the quantity of labor demanded.
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