Potential GDP is represented by points 1 inside the macro PPF.
2 outside the macro PPF.
3 on the macro PPF.
4 to the left of LAS.
5 to the right of LAS.
6 on LAS.
A) 1 and 4
B) 1 and 5
C) 2 and 4
D) 2 and 5
E) 3 and 6

Question

Quizplus · Accepted Answer

Potential GDP is represented by points on the macroeconomic production possibility frontier (PPF) and on the long-run aggregate supply (LAS), indicating an economy's maximum sustainable output given its resources, technology, and institutional structure.

Potential GDP Is Represented by Points 1 Inside the Macro