Rather than being fixed,potential output is __________ all the time thanks to __________ and __________.
A) increasing;inflation;depreciation
B) increasing;population growth;technological advances
C) constant;population growth;inflation
D) decreasing;inflation;depreciation
E) decreasing;population growth;technological advances

Question

Quizplus · Accepted Answer

Potential output refers to the maximum level of output that an economy can produce over a sustained period of time when all resources are used efficiently. This output is not fixed and can increase over time due to factors such as population growth (more people leading to more workers and consumers) and technological advances (leading to greater productivity and efficiency). Option A is incorrect as inflation and depreciation would typically reduce potential output. Option C is incorrect as population growth and inflation can both have positive or negative impacts on potential output depending on other factors. Option D is incorrect as inflation and depreciation would typically reduce potential output. Option E is incorrect as population growth and technological advances would typically increase potential output.

Rather Than Being Fixed,potential Output Is __________ All the Time