If Real GDP Is Greater Than Potential GDP, the Economy

question 10

Multiple Choice

If real GDP is greater than potential GDP, the economy is

• A)in a below full- employment equilibrium.
• B)in an above full- employment equilibrium.
• C)not in a short- run macroeconomic equilibrium.
• D)in a long- run equilibrium.
• E)in a recessionary equilibrium.

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Definitions:

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price over a specified period.

Decreases

A reduction in quantity, size, or intensity of something.

Cross-Price Elasticity

A measure of how much the quantity demanded of one good responds to a change in the price of another good, indicating the relationship between the goods (substitutes or complements).

Substitutes

Goods or services that can be used in place of each other; when the price of one increases, the demand for the other is likely to increase.