According to the classical economic model, which of the following does not lead to an increase in the economy's potential output?

Choose the correct answer

Explanation

In the classical framework, potential output is determined by real factors such as technology, capital, and labor. Increasing the money supply (monetary growth) does not affect the economy's productive capacity; it only influences nominal variables. Therefore, only options B, C, and D can raise potential output, while monetary expansion cannot.

According to the classical economic model, which of … — Aggregate Supply, Unemployment And Inflation | PakQuizHub