An economist warns that the economy is "overheating" and will soon experience high inflation.The economist must be concerned that the economy is near ________.
A) a recession
B) full employment
C) pre-recession levels
D) peak unemployment

Question

Quizplus · Accepted Answer

The term "overheating" refers to an economy that is growing too rapidly and approaching its maximum capacity. Full employment is a sign of a strong economy and when the economy is approaching full employment, it is likely to lead to an increase in demand for goods and services which can cause inflation to rise. Therefore, the economist's concern about high inflation indicates that the economy is near full employment.

An Economist Warns That the Economy Is "Overheating" and Will