If aggregate demand exceeds potential output:
A) an economy's resources are over-utilized.
B) an economy's resources are under-utilized.
C) an economy's resources are fully employed.
D) the pattern of resource use cannot be determined without knowing short-run aggregate supply.

Question

Quizplus · Accepted Answer

When aggregate demand exceeds potential output, it implies that the demand for goods and services is greater than what the economy can produce at full employment, leading to over-utilization of resources.

If Aggregate Demand Exceeds Potential Output