An estimate for the value of potential GDP can be generated by observing and recording
A)the economy's total supply of factors, their normal rates of utilization, and factor productivity.
B)the economy's total output, its total cost and demand for that output.
C)the economy's total supply of factors, the costs of those factors, and their productivity.
D)the total available capacity for production in the Canadian economy.
E)the level of actual GDP when the unemployment rate is zero.

Question

Quizplus · Accepted Answer

Potential GDP is the maximum level of output that can be produced with the economy's existing resources and technology at full employment. Therefore, an estimate of potential GDP can be generated by observing and recording the economy's total supply of factors (such as labor, capital, and natural resources), their normal rates of utilization, and their productivity. This approach takes into consideration both the quantity and quality of factors of production and their efficiency in contributing to economic output.

An Estimate for the Value of Potential GDP Can Be