If the economy is currently in equilibrium at a level of GDP that is below potential GDP, what would move the economy back to potential GDP?

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04-04-2019
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If the economy is currently in equilibrium at a level of GDP that is below potential GDP, what would move the economy back to potential GDP?

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MrsTriplet MrsTriplet · Answer 1 · 2019-04-10T21:36:16+02:00

MrsTriplet MrsTriplet

10-04-2019

Answer: An increase in wealth will move the economy back to potential GDP.

Explanation: If there is an increase in the wealth than it will bring the GDP up. Once GDP is brought up then there is a better chance of the economy reaching equilibrium. Equilibrium happens when two opposite forces are balanced out.

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