Question

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?

Answer 1

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.