What determines potential GDP?
What will be an ideal response?
Potential GDP is determined from the labor market equilibrium. When the labor market is in equilibrium, there is full employment. The quantity of real GDP produced by the full employment quantity of labor is potential GDP.
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All of the following are true of the HPAE EXCEPT
A) macroeconomic stability has been a high priority of their economic policies. B) strong, credible commitments to sharing economic growth across all layers of society exist. C) exports have been promoted while at the same time being more open to imports than other developing countries. D) restrictions on imports of capital goods have helped to favor the development of domestic technology.
The graph of the short-run relationship between the unemployment rate and inflation is called a(n)
A) MP curve. B) LM curve. C) IS curve. D) Phillips curve.
A competitive firm sells its output for $10 per unit. Is the firm's average revenue less than, equal to, or greater than $10?
Assuming a long-run aggregate supply curve, an increase in the money supply results in ________ in output and ________ in price level.
A. a decrease; a decrease B. an increase; no change C. a decrease; no change D. no change; an increase