Final answer:
The term for the maximum amount an economy can produce given full employment of resources is potential GDP, which links to the production possibilities frontier concept. Say's law and the short run aggregate supply curve also relate to the analysis of an economy's output.
Step-by-step explanation:
The term for the maximum quantity that an economy can produce given its existing levels of labor, physical capital, technology, and institutions is potential GDP. This represents an economy's capacity when there is full employment of its resources. The concept of production possibilities frontier (PPF) is closely related, and it depicts the trade-offs between two different goods that a society can produce, illustrating the maximum possible output for a given level of technology and resources. Say's law, which posits that supply creates its own demand, ties into the understanding of how supply-side economics believes that production can influence overall economic demand.
Another concept is the short run aggregate supply (SRAS) curve, which shows a positive short run relationship between the price level for output and real GDP, assuming input prices are fixed. Conversely, stagflation describes a situation where an economy experiences stagnant growth and high inflation simultaneously, which is contrary to the potential GDP scenario.