Question

Chevron signs​ $73b gas deal ​Gorgon, Chevron's huge liquefied natural gas​ project, is finally going forward. The​ company, along with Exxon Mobil and Shell will produce natural gas off the northwest coast of Australia. Gorgon and surrounding fields hold an estimated 40 trillion cubic feet of natural​ gas, the equivalent of 6.7 billion barrels of oil. Gorgon is located for easy shipment to Asia and will employ​ 10,000 workers. ​Source: Radio​ Australia, September​ 10, 2009 Explain how this huge project will influence​ Australia's potential GDP and U.S. potential GDP.

Answer 1

Answer:

Australia - Shift​ Australia's production function​ upward, create a movement up along the production function as the​ full-employment quantity of labor​ increases, and increase potential GDP

United States - Will not change potential GDP as production happens in Australia

Explanation:

Australia's production potential will rise which will be depicted by a shift upwards in the Production Possibilities Frontier (PPF) thereby leading to an increase in the full employment quality of labor and potential GDP for Australia.

As the production is happening in Australia, it will not affect potential GDP in the US.