The growth rate of potential GDP is not affected by
A)the growth rate of the labor force.
B)the growth rate of a nation's capital stock.
C)the rate of technological progress.
D)environmentalists' ability to pass regulations.

Question

Quizplus · Accepted Answer

Potential GDP refers to the maximum rate at which an economy can produce goods and services if all its resources are fully employed. It depends on the growth rate of the labor force, the growth rate of the capital stock, and the rate of technological progress. Environmentalists' ability to pass regulations does not directly affect these factors and therefore does not affect the growth rate of potential GDP.

The Growth Rate of Potential GDP Is Not Affected by