At a trough in the business cycle,the macroeconomic equilibrium is ________ the level of potential real GDP.
A)greater than
B)rising above
C)equal to
D)less than
E)None of the above answers is always correct because the relationship depends on whether the previous phase of the business cycle had been a recession or an expansion.

Question

Quizplus · Accepted Answer

During a trough in the business cycle, the economy is experiencing low levels of economic activity and high unemployment, indicating that the macroeconomic equilibrium is below the level of potential real GDP. Therefore, the correct answer is D.

At a Trough in the Business Cycle,the Macroeconomic Equilibrium Is