If the quantity of real GDP demanded is greater than the quantity of real GDP supplied,then
A)aggregate demand changes to restore equilibrium.
B)the price level falls to restore the macroeconomic equilibrium.
C)the economy must be producing at potential GDP.
D)the price level falls and firms decrease production.
E)the price level rises and firms increase production.

Question

Quizplus · Accepted Answer

When the quantity of real GDP demanded exceeds the quantity supplied, it creates upward pressure on prices, leading to a rise in the price level. Firms respond by increasing production to meet the higher demand, moving towards equilibrium.

If the Quantity of Real GDP Demanded Is Greater Than