When potential GDP increases, is it necessarily the case that real GDP increases as well? Explain
What will be an ideal response?
An increase in potential GDP is a result of an expanding labor force, growth in the capital stock, and technological change. The actual level of real GDP may be higher or lower than potential GDP. If firms are all producing at capacity, we would expect potential GDP and real GDP to be equal. If firms are producing below capacity, we would expect real GDP to be below potential GDP. And if firms are temporarily producing above capacity, real GDP will be above potential GDP.
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A) depositors cannot trust each other to keep their money in the bank B) deposit insurance renders all banks equally fragile C) no bank can survive when its competitors cease to operate D) government regulators will step in to punish any bank suspected of poor management
What is the difference between the cross-elasticity of demand for two goods which are substitutes and two goods which are complements?