When output is greater than the economy's long-run capacity, which of the following is most likely to occur?
A) a reduction in the general level of prices
B) an abnormally high rate of unemployment
C) increases in real interest rates and real resource prices
D) a reduction in imports

Question

Quizplus · Accepted Answer

When output exceeds the economy's long-run capacity, it typically leads to increased demand for resources, driving up real interest rates and real resource prices due to scarcity and competition for these resources.

When Output Is Greater Than the Economy's Long-Run Capacity, Which