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The level of potential output, Y*, acts like an anchor for the level of real GDP. Which of the following best explains this statement? Question
The level of potential output, Y*, acts like an anchor for the level of real GDP." Which of the following best explains this statement? Question content area bottom Part 1 A. Following an AD or AS shock that pushes real GDP away from Y*, changing technology brings Y* back to real GDP. B. Following an AD or AS shock that pushes real GDP away from Y*, the adjustment of factor prices brings real GDP back to Y*. C. The concept of potential output, Y*, as an anchor for real GDP refers to the fiscal policy tools used to bring real GDP back to Y*. D. The level of potential output, Y*, is equal to whatever the level of actual GDP, no matter what shocks hit the economy. E. Real GDP is "anchored" to potential output, Y*, because real GDP is, by definition, always equal to Y*
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