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Mains Capsule Questions

Define potential GDP and explain its determinants. What are the factors that have been inhibiting India from realizing its potential GDP?

Like Gross Domestic Product, potential GDP also represents the market value of goods and services, when the economy is operating at a high rate of resource use. 

Potential GDP is an estimate of full employment which was an assumption of Classical economic thought and that aggregate demand does not exceed aggregate supply.

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