An increase in potential GDP results from. A decrease in potential GDP results f

Question

An increase in potential GDP results from. A decrease in potential GDP results from. events, 3 and 4; even 5 event 3; event 1 events 4 and 5; events 1 and 3 events 4; event 5 events 1 and 3; events 4 and 5 The middle East cuts supplies of oil to the united states. The new York Yankees win the World series. U.S. labor unions negotiate wage hikes that affect all workers. A huge scientific breakthrough doubles the output that an additional hour of U.S. labor can produce Migration to the United states increases the working-age population.

Explanation / Answer

3) events 4 and 5; events 1 and 3.

Potential gdp is the highest real gross domestic product that can be produced in the long term. Bargaining by labor union leads to reduction in the potential gdp because labor union leads to increase in wages which increases the cost of production. As a result, production by firms decreases.

Scientific breakthrough doubles the output that an additional hour of US labor can produce which means production of goods increases. Therefore, increase in potential gdp. Decrease in the supply of oil by Middle east decreases the potential gdp.

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