Which of the following must occur to achieve large and lasting increases in output?
A)An increase in potential GDP.
B)An increase in the use of existing capacity.
C)A shift in aggregate supply to the left.
D)A commitment to contractionary fiscal policy.

Question

Quizplus · Accepted Answer

To achieve large and lasting increases in output, there must be an increase in potential GDP, which refers to the maximum amount of goods and services an economy can produce with its existing resources, technology, and institutions. This can be achieved through measures such as investments in education, infrastructure, and research and development, which can increase the productivity and efficiency of the economy in the long run. The other choices are not conducive to achieving large and lasting increases in output. An increase in the use of existing capacity can lead to short-term increases in output but may not be sustainable in the long run. A shift in aggregate supply to the left indicates a decrease in the availability of goods and services, which would lead to a decrease in output. Commitment to contractionary fiscal policy, such as tax increases or spending cuts, is likely to result in a decrease in output and not an increase.

Which of the Following Must Occur to Achieve Large and Lasting