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

Question

Quizplus · Accepted Answer

When the quantity of real GDP demanded is less than the quantity of real GDP supplied, it creates a surplus in the market, forcing firms to decrease production and lower the price level in order to clear the excess supply. This adjustment will continue until the quantity demanded equals the quantity supplied, restoring the equilibrium in the market.

If the Quantity of Real GDP Demanded Is Less Than