1. Identify two situations when actual output is less than potential output.
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2
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A situation where the company has employed underqualified personell are likely to experience less actual output than the potential output since the input from the underqualified persons yields lower fruits.
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1
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This occurs when actual output is less than potential output gap. This is also called a deflationary (or recessionary) gap. In this situation, the economy is producing less than potential. There will be unemployment, low growth and/or a fall in output.
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