Read Eye on U$.$S$.$ Potential GDP$.$

Explain why U$.$S$.$ potential GDP per worker per week is greater than that in Europe.

What could induce Europeans to work the same hours as Americans and would that close the gap between potential GDP per worker in the two economies?

U$.$S$.$ potential GDP per worker per week is greater than that in Europe because

A$.$ U$.$S$.$ workers work fewer hours on average but they are more productive than Europeans

B$.$ the supply of labor in America is smaller than the supply of labor in Europe

C$.$ U$.$S$.$ workers are more productive per hour of work and they work longer hours than Europeans

D$.$ the United States uses less capital but they use it more effectively

Europeans could be induced to work the same hours as Americans by taxes and unemployment benefits.

A$.$ raising; raising

B$.$ lowering; raising

C$.$ raising; lowering

D$.$ lowering; lowering

Everything else remaining the same, if Europeans work the same hours as Americans, the gap between potential GDP per workers in the two economies

A$.$ is eliminated because potential GDP is determined by labor hours

B$.$ becomes smaller but is not eliminated because U$.$S$.$ workers are more productive per hour of work

C$.$ becomes smaller but is not eliminated because of an increase in European wages

D$.$ remains unchanged because of similar stocks of capital