At a peak in the business cycle, the macroeconomic equilibrium is ________ the level of potential real GDP.
A) greater than
B) less than
C) equal to
D) falling below
E) None of the above answers is always correct because the relationship depends on whether the previous phase of the business cycle had been a recession or an expansion.

Question

Quizplus · Accepted Answer

At a peak in the business cycle, the economy is typically operating above its potential real GDP, indicating that the actual output is greater than the sustainable long-term output level.

At a Peak in the Business Cycle, the Macroeconomic Equilibrium