If real GDP is less than potential GDP, the economy is
A) not in macroeconomic equilibrium.
B) at full employment.
C) in an above-full-employment equilibrium.
D) in a below-full-employment equilibrium.

Question

Quizplus · Accepted Answer

When real GDP is less than potential GDP, it indicates that the economy is not utilizing all of its resources efficiently, leading to a situation where it is in a below-full-employment equilibrium. This means there are idle resources, including labor, which is why the economy is not at full capacity or full employment.

If Real GDP Is Less Than Potential GDP, the Economy