Economists define potential income as the level of income that: Group of answer choices an economy is capable of producing without generating significant unemployment. the economy always produces. an economy is capable of sustaining or producing without generating higher inflation. which the economy gravitates towards in the short-run.

Question

Ashlyn Crawford

Business

13 June, 14:37

Economists define potential income as the level of income that: Group of answer choices an economy is capable of producing without generating significant unemployment. the economy always produces. an economy is capable of sustaining or producing without generating higher inflation. which the economy gravitates towards in the short-run.

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Answers (1)

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Vaughn Glass · Answer 1

an economy is capable of sustaining or producing without generating higher inflation.

Explanation:

In simple words, potential economy refers to that level of output or GDP that an economy can produce and sustain over along term with its given level of inflation and resources available.

Potential income has to be maintained over a long term and is based on the assumption that all of the resources available, whether human or natural, will be utilized as according to their maximum utility power.