If actual GDP is greater than potential GDP:
A)businesses can easily increase supply.
B)the economy can experience inflation.
C)businesses are not producing at maximum capacity.
D)unemployment must be higher than the natural rate of unemployment.

Question

Quizplus · Accepted Answer

When actual GDP is greater than potential GDP, it suggests that the economy is overheating and can experience inflation. This is because demand for goods and services is outpacing the economy's ability to produce them at a sustainable rate, leading to an increase in prices.

If Actual GDP Is Greater Than Potential GDP