The maximum quantity that an economy can produce, given its existing levels of labor, physical capital, technology, and institutions, is called Potential GDP.
What is meant by GDP?
GDP is known to be the term hat looks into or one that measures the monetary worth of final goods and services and it is one which is said to be bought by the final user.
What is Potential GDP?
Potential GDP is known to be called full-employment GDP and this is said to be the maximum rate or quantity that an economy is known to be able to make or produce given full employment of its former levels of labor, physical capital, and others.
Hence, The maximum quantity that an economy can produce, given its existing levels of labor, physical capital, technology, and institutions, is called Potential GDP.
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