Which of the following must occur to achieve large and lasting increases in output?
A)An increase in potential GDP.
B)An increase in the use of existing capacity.
C)A shift in aggregate supply to the left.

Question

Quizplus · Accepted Answer

In order to achieve large and lasting increases in output, there must be an increase in potential GDP, which means increasing the economy's ability to produce goods and services through improvements in technology, education, infrastructure, and other factors. Increasing the use of existing capacity may provide some short-term gains, but it will eventually reach its limit without investment in increasing potential GDP. A shift in aggregate supply to the left would actually cause a decrease in output.

Which of the Following Must Occur to Achieve Large and Lasting