When potential GDP increases,
A)there is neither a movement along nor a shift in the AS curve.
B)there is a movement down along the AS curve.
C)the AS curve shifts rightward.
D)the AS curve shifts leftward.
E)there is a movement up along the AS curve.

Question

Quizplus · Accepted Answer

When potential GDP increases, it indicates that the economy's capacity to produce goods and services has grown, leading to a rightward shift in the Aggregate Supply (AS) curve.

When Potential GDP Increases