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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Rare earth metals are used to manufacture some important electronic components in popular products like cell phones. These metals are not really rare, but they are expensive to extract from the ground
What happens to the market for the rare earth metals if these extraction costs increase? A) Demand curve shifts leftward B) Demand curve shifts rightward C) Supply curve shifts leftward D) Supply curve shifts rightward
When psychologists refer to the "Paradox of Choice", what do they mean?
a. More choices may lead people to avoid the decision all together. b. More choices always make people at least as well off (related to the option value principle). c. Risk-averse people sometimes prefer risk because of the thrill it provides. d. If two people with free will make simultaneous decisions, these may sometimes conflict.
Because fiscal policy affects the quantity that the government borrows in financial capital markets, it not only affects aggregate demand, but it can also affect _____________ rates.
a. interest b. employment c. inflation d. wage
Scientific evidence suggests that consumption of foods rich in fiber lowers cholesterol. As a result, the demand for bran increases at every price by 5,000 bushels and the supply curve for bran is perfectly price elastic. The quantity of bran consumed will
a. not change. b. change unless the demand curve is perfectly inelastic. c. rise by exactly 5,000 bushels. d. not rise by exactly 5,000 bushels unless the demand curve is perfectly inelastic.