Which of the following would cause an increase in the potential output of a country?
A) An increase in the capital stock
B) A temporary decrease in exports
C) An increase in the money supply
D) A decrease in the labor force

Question

Quizplus · Accepted Answer

An increase in the capital stock, which includes physical investments such as machinery, equipment, and facilities, would lead to an increase in the potential output of a country by increasing the productivity and efficiency of workers. A temporary decrease in exports (B) would have a negative impact on the country's output, while an increase in the money supply (C) would only cause inflation and not necessarily increase the country's potential output. A decrease in the labor force (D) would also have a negative impact on the country's output.

Which of the Following Would Cause an Increase in the Potential