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.

Question

Quizplus · Accepted Answer

Real GDP being greater than potential GDP indicates that the economy is producing above its full capacity level, meaning that resources are fully employed and possibly even over-utilized. This is an above full-employment equilibrium.

If Real GDP Is Greater Than Potential GDP, the Economy