When the population increases, potential GDP _______ and potential GDP per hour of labour _______.

Question

Quizplus · Accepted Answer

When the population increases, potential GDP increases because there are more people to work and produce goods and services. However, potential GDP per hour of labor decreases if the increase in population outpaces the increase in productivity, as it means there's more labor available than can be efficiently utilized, leading to lower productivity per hour.

When the Population Increases, Potential GDP _______ and Potential GDP