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Differentiate between Actual and Potential output.
Actual output is that level which economy in fact produces. In contrast, potential output is the aggregate capacity output of a nation; the maximum amount of goods and services that can be produced with available resources and a given state of technology.
I. Consider the following static optimization problem. Suppose that a consumer has financial wealth W and owns the house H¯ . She has utility over housing H and nonhousing co
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economic issues
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