In the aggregate demand-output model, if an economy operates above equilibrium GDP, there will be:
A) unplanned inventory depletion.
B) an increase in GDP.
C) a decrease in employment.
D) an increase in employment.

Question

Quizplus · Accepted Answer

When an economy operates above equilibrium GDP, it typically leads to unplanned inventory accumulation, which results in a decrease in production and employment as businesses adjust to the excess supply.

In the Aggregate Demand-Output Model, If an Economy Operates Above