Choose the statement about the Lucas wedge that is correct. A. The Lucas wedge equals real GDP minus potential GDP. B. The Lucas wedge is the dollar value of the accumulated gap between what real GDP per person would have been if the 1970s growth rate had persisted and what real GDP per person turned out to be. C. The Lucas wedge accumulated to $711,000 per person by 2020. D. The Lucas wedge in 2020 is smaller than the Lucas wedge in 2000.
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Step 1: The Lucas wedge is the difference between the actual GDP per capita and the potential GDP per capita. Show more…
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