Final answer:
New laws mandating increases in capital could potentially raise full employment output if they encourage capital accumulation but could also harm it if they make capital acquisition more difficult. Meeting increased export demand at full employment would require increased productivity or labor supply. A policy aiming for zero unemployment by increasing demand could lead to inflation without increasing long-term output.
Step-by-step explanation:
When considering how new laws mandating increases in capital could impact full employment output, it's important to recognize that if the laws facilitate capital accumulation, they might initially boost the economy's ability to produce goods and services, thereby potentially raising full employment output. However, the effects depend on how the increase in capital is financed and its impact on other economic factors such as labor supply and productivity. If a law makes capital more expensive or difficult to acquire, companies may hesitate to expand or invest, which could dampen labor demand and thus impact full employment output negatively.
In a situation where the economy is at potential GDP and there is an increase in export demand, producing more exports could be difficult without causing inflation. The economy would need to either increase productivity, redirect resources from other sectors, or increase the labor supply through immigration or increased workforce participation to meet the increased demand without negatively affecting full employment output. In the context of macroeconomic policy, if the government aims to achieve zero unemployment by increasing aggregate demand indefinitely, the neoclassical perspective suggests that in the short run, output and employment might increase, but in the long run, this policy is likely to lead to higher price levels—inflation—without a corresponding increase in output due to the economy's production capability limitation at full employment.