According to long-run growth models, which of the following is least likely to increase potential output?
A)Increased levels of entrepreneurship
B)Higher levels of saving and capital accumulation
C)Increased aggregate demand
D)More rapid development of growth-compatible institutions

Question

Quizplus · Accepted Answer

Increased aggregate demand is typically associated with short-term fluctuations in output rather than long-term increases in potential output. Long-run growth models, such as the Solow growth model, emphasize factors like savings, capital accumulation, technological innovation, and institutional development as key drivers of sustained increases in potential output.

According to Long-Run Growth Models, Which of the Following Is