Potential GDP is the level of economic output that an economy can produce when all resources are fully employed. If actual GDP is $500 billion and there is a negative GDP gap of $20 billion, it means that the economy is producing $20 billion less than its potential.
Therefore, potential GDP can be calculated as:
Potential GDP = Actual GDP + GDP Gap
Potential GDP = $500 billion + (-$20 billion)
Potential GDP = $480 billion
Therefore, the potential GDP in this case is $480 billion.