Which of the following is true when an economy produces at full employment,but consumers,government,businesses,and the foreign sector do not buy all the output?
A)Inventories are depleted.
B)There is a recessionary gap.
C)Unemployment falls.
D)The price level rises.

Question

Quizplus · Accepted Answer

When an economy produces at full employment but there is insufficient demand to purchase all the output, it results in a recessionary gap, indicating that the actual GDP is less than the potential GDP.

Which of the Following Is True When an Economy Produces