1) The resolution depends on your monitor also. Your monitor has to be capable of displaying high resloutions or else you will just get a blank screen if you try.
2) Regarding your second question, the game you play also matters. With your current hardware you might be able to play some games quite smoothly at high resolutions but others will perform pretty badly. Also the game should support the resolution at which you want to play.
The resolution at which screenshots are captured depends on which setting you are playing the game.
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