A below-full-employment equilibrium
A) is not possible in the U.S. economy.
B) occurs when real GDP is less than potential GDP.
C) occurs when the price level is rising very quickly.
D) occurs when real GDP exceeds potential GDP.

Question

Quizplus · Accepted Answer

A below-full-employment equilibrium occurs when the actual output (real GDP) of the economy is less than the potential output (potential GDP), indicating that not all resources, especially labor, are being fully utilized.

A Below-Full-Employment Equilibrium