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.

Economics

You might also like to view...

The nominal GDP of Year 2 is

A) $800. B) $1050. C) 1900. D) $2400.

Economics

Give an example of an automatic stabilizer. Explain how automatic stabilizers work in the case of recession

What will be an ideal response?

Economics