When the economy is creating less output than its potential, it means:
A) some resources are unemployed.
B) the economy is expanding.
C) contractionary policy needs to be enacted.
D) the government will reduce its spending.

Question

Quizplus · Accepted Answer

When the economy is creating less output than its potential, it implies that some resources are being unemployed or underutilized. This could be due to a lack of demand for goods and services, inefficient use of resources or other structural factors.

When the Economy Is Creating Less Output Than Its Potential