What factors increase potential GDP? Include a definition of potential GDP in your answer
What will be an ideal response?
Potential GDP is the level of GDP attained when all firms are producing at capacity. Growth in potential GDP is determined by growth in the labor force and the capital stock and by technological change. Capital investments accompany growth in the labor force, encouraging technological progress and increasing potential GDP.
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During a recession, output declines result in
A) lower unemployment in the economy. B) higher unemployment in the economy. C) no impact on the unemployment in the economy. D) higher wages for the workers.
When real income ________, the demand curve for money shifts to the ________ and the interest rate ________, everything else held constant
A) falls; right; rises B) rises; right; rises C) falls; left; rises D) rises; left; rises