Potential output is equal to
A) long run aggregate demand.
B) short-run aggregate demand.
C) short-run aggregate supply.
D) long-run aggregate supply.

Question

Quizplus · Accepted Answer

Potential output refers to the level of output an economy can produce in the long run when all resources are fully utilized. It is determined by the level of technology, quality and quantity of inputs and the efficiency of production. Therefore, the best choice would be long-run aggregate supply (LRAS) which reflects the potential output of an economy.

Potential Output Is Equal to