Answer to Question #106741 in Macroeconomics for Mohammad Tausif Khan

Question

Which of following best describes the concept of potential output?

1.the total output that can be produced when all factors of production(land,labour and capital) are fully employed.
2.the total output that can be produced when the economy is in short run economic equilibrium
3.the total output that can be produced in future when technological advances allow a higher level of output.
4.the total output that can be produced if no productive resource (land,labour, and capital) was ever left idle.

Answer 1

The correct answer is 1.the total output that can be produced when all factors of production(land,labour and capital) are fully employed.