If the economy is in equilibrium at $400 billion of GDP and the full-employment GDP is $500 billion,
A)real and nominal GDP will both increase.
B)GDP will remain at $400 billion unless aggregate expenditures change.
C)real GDP will increase, but nominal GDP will decrease.
D)the price level will increase.

Question

Quizplus · Accepted Answer

In equilibrium, GDP will remain at $400 billion unless there is a change in aggregate expenditures to shift the economy towards the full-employment GDP of $500 billion.

If the Economy Is in Equilibrium at $400 Billion of GDP