Which of the following events would be most likely to increase an economy's potential output?

Question

Quizplus · Accepted Answer

An improvement in technology would increase an economy's potential output as it would allow for more efficient production processes and the ability to produce more goods and services with the same amount of resources. A tax increase (option A) would decrease aggregate demand and potentially lead to decreased output. An increase in transfer payments (option B) would increase aggregate demand and potentially lead to increased output in the short run, but it would not increase the economy's potential output. An increase in net exports (option D) would increase aggregate demand and potentially lead to increased output in the short run, but it would not increase the economy's potential output.

Which of the Following Events Would Be Most Likely to Increase