- If potential GDP increases, then in the figure above the potential GDP line_{--------------------} , and the aggregate supply curve_{--------------------} . A)shifts rightward; does not shift B)shifts rightward; shifts leftward C)does not shift; does not shift D)does not shift; shifts rightward E)shifts rightward; shifts rightward

Question

Quizplus · Accepted Answer

An increase in potential GDP indicates an increase in the economy's capacity to produce goods and services, which shifts both the potential GDP line and the aggregate supply curve to the right.

- If Potential GDP Increases, Then in the Figure Above the the Potential