If potential output exceeds actual real output by a wide margin,this implies:
A)an excess of imports over exports
B)a high rate of unemployment
C)that the majority of consumer demand has changed from goods to services
D)a sharply rising price level
E)that the majority of consumer demand has changed from services to goods

Question

Quizplus · Accepted Answer

Potential output is the maximum amount of goods and services that can be produced given the available resources. If actual real output is significantly lower than potential output, it means that resources are being underutilized and there is a surplus of labor and capital. This results in higher unemployment rates, as there are fewer job opportunities available for workers.

If Potential Output Exceeds Actual Real Output by a Wide