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Use the AdAS 3-curve model. Explain the underlying logic behind this intuition of the quote below from an Economist article, Potential output is an estimate
Use the AdAS 3-curve model. Explain the underlying logic behind this intuition of the quote below from an Economist article, \"Potential output is an estimate of an economy's speed limithow rapidly it can grow before inationary overheating sets in.\" Here is the original paragraph: Potential output is an estimate of an economy's speed limit-how rapidly it can grow before inationary overheating sets in. It is determined by growth in the labour force, the capital stock and productivity. The IMF reckons that potential growth in advanced economies was already on the decline in the years before the crisis, thanks to weak productivity growth and ageing workers. The crisis then squeezed investment, amplifying these problems. Potential annual growth, which averaged 2.2% in 2001-07, fell to 1.5% in 2013 -14
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