In the classical model, potential output cannot be increased by ?
Correct answer: A. monetary growth
- A. monetary growth
- B. better technology
- C. more capital
- D. higher labor supply
Explanation
Classical potential output depends on real productive capacity, such as technology, capital, and labor supply. Monetary growth changes nominal variables and prices, not the economy's productive capacity.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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