The idea that potential GDP is the sustainable upper limit of production means that

Question

Quizplus · Accepted Answer

Potential GDP represents the maximum sustainable level of production, which accounts for the economy's labor force, physical capital, and technology. It is possible for real GDP to temporarily exceed potential GDP, but not in the long run, as the economy would eventually face constraints such as labor shortages, inflationary pressures, or resource depletion. Therefore, choice A is the correct answer.

The Idea That Potential GDP Is the Sustainable Upper Limit