Potential output is defined as __________.
A)the amount of total output if all inputs were utilized at their long-run,sustainable levels
B)what an economy produces when it is at capacity
C)the current level of output
D)the amount of output where inflation is zero
E)none of the above

Question

Quizplus · Accepted Answer

Potential output refers to the maximum amount of output an economy can produce when all inputs are utilized at their long-run, sustainable levels. It is also sometimes referred to as potential GDP or full employment GDP. Therefore, choice A is the correct definition of potential output.

Potential Output Is Defined as __________