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)does not shift;shifts rightward
C)shifts rightward;shifts rightward
D)shifts rightward;shifts leftward
E)does not shift;does not shift

Question

Quizplus · Accepted Answer

When potential GDP increases, it indicates an increase in the economy's capacity to produce goods and services, which shifts the potential GDP line rightward. This also typically causes the aggregate supply curve to shift rightward, reflecting the increased production capacity.

If Potential GDP Increases,then in the Figure Above the Potential