Economists can estimate the value of potential GDP by observing the amounts of available
A)inputs, their normal rates of utilization, and productivity.
B)inputs, their productivity, and demand.
C)inputs, their costs, and productivity.
D)output, its normal rates of utilization, and productivity.
E)output, its cost, and demand.

Question

Quizplus · Accepted Answer

Potential GDP is a measure of the maximum level of output an economy can produce with its available resources, including labor, capital, and natural resources. Economists can estimate the value of potential GDP by observing the amounts of available inputs, their normal rates of utilization, and productivity. This involves looking at how much of the available labor force is employed, how much capital is being used, and how efficiently these resources are being used to produce goods and services. Productivity plays a key role in this estimation as it determines how much output can be generated for a given amount of inputs.

Economists Can Estimate the Value of Potential GDP by Observing