Economics Aggregate Demand And Supply Questions
Potential GDP refers to the maximum level of output that an economy can produce when all resources are fully utilized, including labor, capital, and technology, without causing inflationary pressures. It represents the economy's long-term sustainable level of production and is determined by the available factors of production and the level of technology. Potential GDP serves as a benchmark for measuring the economy's actual output and helps policymakers assess the economy's performance and determine appropriate macroeconomic policies.