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Two separate capacity constraints are discussed in this

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Two separate capacity constraints are discussed in this chapter: (1) the actual physical capacity of existing plants and

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Two separate capacity constraints are discussed in this chapter: (1) the actual physical capacity of existing plants and equipment, shown as the vertical portion of the short-run AS curve, and (2) potential GDP, leading to a vertical long-run AS curve. Explain the difference between the two. Which is greater, fullcapacity GDP or potential GDP? Why?

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