When the Output of an Economy Exceeds the Economy's Full-Employment

question 74

Multiple Choice

When the output of an economy exceeds the economy's full-employment capacity,

• A) aggregate supply will increase until the economy can produce the output at the existing price level.
• B) the actual rate of unemployment will be less than the natural rate.
• C) wage rates and resource prices will tend to fall.
• D) interest rates will decline and help direct the economy back to full employment.