If real GDP exceeds potential GDP,this means that
A)output is below the level produced at the benchmark rate for high employment and high rate of resource utilization.
B)this cannot occur; the economy can never be at a point where real GDP exceeds potential GDP.
C)cyclical output is above what the economy can sustain in the long-run.
D)the economy is expanding.

Question

Quizplus · Accepted Answer

When real GDP exceeds potential GDP, it implies that cyclical output is above the level the economy can sustain in the long run. In other words, the economy is producing at a level that is not sustainable and may lead to inflationary pressures or a recession in the future.

If Real GDP Exceeds Potential GDP,this Means That