Potential GDP
A)might either increase or decrease as the price level increases,depending on whether aggregate demand increases or decreases.
B)never changes.
C)is independent of the price level.
D)increases as the price level increases because firms supply more goods and services.
E)decreases as the price level increases because people demand fewer goods and services.

Question

Quizplus · Accepted Answer

Potential GDP is the maximum level of output that an economy can produce with its existing levels of labor, capital, and technology. It is independent of the price level, as it is determined by the productive capacity of an economy.