When the economy is producing at a quantity greater than its long-run aggregate supply:
A)it is pushing some of its resources to operate beyond capacity.
B)the economy is experiencing greater economic growth.
C)it causes a bubble to form in one of its major sectors.
D)It is not possible to produce beyond the long-run aggregate supply curve.

Question

Quizplus · Accepted Answer

When the economy is producing at a quantity greater than its long-run aggregate supply, it means that it is using some of its resources beyond their capacity. This can lead to a temporary increase in production, but it is not sustainable in the long run as it can lead to inefficiency, higher costs, and a decline in overall economic performance.

When the Economy Is Producing at a Quantity Greater Than