If potential GDP increases,then the
A)aggregate supply curve shifts leftward.
B)aggregate supply curve shifts rightward.
C)real wage rate increases.
D)real wage rate falls.
E)aggregate demand curve shifts rightward.

Question

Quizplus · Accepted Answer

An increase in potential GDP means that the economy is capable of producing more output. This leads to an increase in the availability of input factors such as labor and capital, which in turn shifts the aggregate supply curve to the right.

If Potential GDP Increases,then the