Which of the following is the best definition of potential gross domestic product?

Question

Quizplus · Accepted Answer

Potential gross domestic product (potential GDP) is the maximum amount of goods and services an economy can produce when all its resources (land, labor, capital, and technology) are fully employed. It is a theoretical concept that represents an economy's productive capacity at a given point in time, assuming that all resources are being used efficiently. Option A is incorrect because potential GDP is not a fixed rate of growth, but rather the maximum level of output an economy can produce. Option C is incorrect because it does not reflect the full meaning of potential GDP, which includes the assumption of full resource utilization. Option D is incorrect as potential GDP is a recognized economic concept.

Which of the Following Is the Best Definition of Potential