An increase in potential GDP would most likely be caused by a (an)
A)increase in interest rates.
B)increase in factor productivity.
C)decrease in factor- utilization rates.
D)decrease in saving in the short run.
E)increase in the unemployment rate.

Question

Quizplus · Accepted Answer

An increase in factor productivity means that the economy is producing more with the same amount of inputs, which results in an increase in potential GDP. The other options listed would not necessarily lead to an increase in potential GDP.

An Increase in Potential GDP Would Most Likely Be Caused