Potential output is understood to mean the highest possible level of economic output that can be achieved with a given level of technology using the available production factors of labour and capital at normal capacity. The percentage change in potential output therefore denotes an economy’s trend rate of growth.
I am telling this even though I expect you will have already heard about it in one of your economics lectures, but you know, you can’t always remember everything ... Graphically, this change is usually illustrated as follows: a line shows trend GDP growth over time, while actual GDP sometimes grows faster and sometimes slower, which is shown by a cyclical curve along the trend line.