Question

Potential GDP is:

a. minimum amount of output that can be produced given the labor force, capital stock, and technology.
b. maximum amount of output that can be produced given the labor force, capital stock, and technology.
c. varies over the business cycle.
d. none of the above.

Answer 1

b. maximum amount of output that can be produced given the labor force, capital stock, and technology.

Step-by-step explanation:

GDP refers to the gross domestic product which reflects the finalized value of the goods and services produced domestically

On the other side, the potential GDP refers to the maximum level of output that can be produced by considering the labor force, capital stock, technology by taking the constant inflation rate

Therefore option b is correct