How Potential GDP Grows

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When there is an increase in real GDP, one can find the presence of economic growth. However, we cannot state recovery from a recent recession or a sudden increase in real GDP to be an economic growth.

What we understand from potential GDP is a sustainable economic growth where the hike continues year after year without fail.

Now, 2 important questions in this respect are:

  • What are the aspects that regulate this potential GDP?
  • What are the factors that help in its growth?

 

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