Potential output: A. is purely a physical phenomenon. B. is related to the long-term growth trend. C. requires government expenditures. D. requires the purchase of new equipment.

B.

Explanation:

Potential output is related to long term growth trend.

Economic growth is the rise in the in the market value (inflation-adjusted) of the products and services which an economy produces over time. It is the percentage increase in the real gross domestic product.

The national income accounting can be used to calculate economic growth. Potential output is directly related to the long term growth trend and vice versa. If there is an increase in output, there will be an increase in growth in the economy all other things constant.