The economy's level of production capacity. This is the level of aggregate output the economy can produce on a sustained basis, without causing inflation to either rise or fall.
The economy's maximum sustainable output level, given the supply of resources, the state of technology, and the underlying economic institutions; the output level when there are no surprises about the price level.
A level of production the economy is able to achieve with stable inflation. A protracted period of output above potential tends to generate higher inflation and vice versa.
the level of output that would prevail if labor were fully employed (output may exceed that level if workers work more than the normal level of overtime)
In macroeconomics, the highest level of overall production (usually expressed in terms of GDP) that does not lead to too much inflation.
The level of real GDP(gross domestic product) that can be sustained in the long run and that is consistent with constant inflation.
In economics, potential output (also referred to as "natural real gross domestic product") refers to the highest level of real Gross Domestic Product output that can be sustained over the long term. The existence of a limit is due to natural and institutional constraints. If actual GDP rises and stays above potential output, then (in the absence of wage and price controls) inflation tends to increase as demand exceeds supply.
