Which of these is most likely to reduce the potential output of an economy?
A) an increase in the size of the labor force
B) a deterioration in the quality of the labor force
C) a decrease in the cost of using computers
D) a decrease in the price level
E) an increase in the price level

Question

Quizplus · Accepted Answer

A deterioration in the quality of the labor force, such as a decrease in the education or skill level of workers, can lead to decreased productivity and lower potential output of an economy. The other choices can lead to increased potential output: A) an increase in the size of the labor force can lead to more production; C) a decrease in the cost of using computers can lead to more efficient production; D) a decrease in the price level can increase consumption and investment, leading to increased production; E) an increase in the price level can increase profits and investment, leading to increased production.

Which of These Is Most Likely to Reduce the Potential