In reality,idle resources must exist in the economy in order for the multiplier process to lead to an increase in Real GDP.

Question

Quizplus · Accepted Answer

The multiplier process depends on the existence of idle resources in the economy, which can be utilized to produce additional output without putting upward pressure on prices. When there are no idle resources, any additional demand for goods and services will simply result in price increases rather than an increase in output. Therefore, idle resources are necessary for the multiplier process to work and lead to an increase in Real GDP.

In Reality,idle Resources Must Exist in the Economy in Order