If an increase in aggregate expenditures results in no increase in real GDP, we can surmise that the
A)economy is in a deep recession.
B)MPC equals 1.
C)economy is already operating at full employment.
D)price level has fallen.

Question

Quizplus · Accepted Answer

When the economy is operating at full employment, any increase in aggregate expenditures will not lead to an increase in real GDP because the economy is already producing at its maximum capacity.

If an Increase in Aggregate Expenditures Results in No Increase