Which of the Following Would Be a Direct Result of Real

question 9

Multiple Choice

Which of the following would be a direct result of real GDP being above potential GDP?

• A)Firms would raise their prices and there would be a subsequent rise in inflation.
• B)Firms would lower their prices and there would be a subsequent decrease in inflation.
• C)Government spending would decline.
• D)None of the above would be a result.
• E)Real GDP can never be above potential GDP.