Which of the following does not occur when real GDP rises above potential GDP?

Question

Quizplus · Accepted Answer

When real GDP rises above potential GDP, there is typically high demand for goods and services which leads to firms increasing production and hiring more workers. This causes the unemployment rate to fall below the natural unemployment rate (A), the capacity utilization rate to increase (B), and demand to increase (E). However, if there is an increase in demand beyond the capacity of firms to produce, they may not be able to meet the demand and may increase their prices (C). This could result in inflation, but not necessarily an increase in the unemployment rate above the natural rate (D).

Which of the Following Does Not Occur When Real GDP