Which of the following does NOT lead to an increase in potential GDP?
A) labor force grows
B) technological change takes place
C) new machinery and equipment are installed
D) aggregate expenditures increase

Question

Quizplus · Accepted Answer

While an increase in aggregate expenditures can lead to an increase in real GDP, it does not necessarily lead to an increase in potential GDP. Potential GDP is determined by factors such as the size and skill level of the labor force, the amount and quality of physical capital (machinery and equipment), and technological progress.

Which of the Following Does NOT Lead to an Increase