Potential GDP is the level of output that could be produced in an economy if all factors of production were employed.

Question

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Potential GDP is defined as the highest level of economic output that can be sustained over time given the economy's existing level of resources, technology, and institutions. It represents the hypothetical maximum level of output that an economy can produce with full employment of all resources such as labor, capital, and land.

Potential GDP Is the Level of Output That Could Be