If actual GDP is less than potential GDP:
A)businesses are producing at maximum capacity.
B)the economy is unable to increase production any further.
C)aggregate expenditure must be less than output.
D)unemployment will rise in the economy.

Question

Quizplus · Accepted Answer

If actual GDP is less than potential GDP, it means that the economy is not producing at its full capacity. This is usually due to unemployment or underemployment of resources, because if all resources were fully utilized, the economy would be producing at its potential. Therefore, option D, unemployment will rise in the economy, is the correct choice.

If Actual GDP Is Less Than Potential GDP