Explain the concept of potential output. Why is potential output difficult to measure? Suppose a worker’s income was $15,000 in 1960 and $45,000 in 2010. Using the GDP deflator as a price index,...

Explain the concept of potential output. Why is potential output difficult to measure?

Suppose a worker’s income was $15,000 in 1960 and $45,000 in 2010. Using the GDP deflator

as a price index, calculate whether the worker’s real income had increased or decreased