On a TE-TP diagram consider a level of Real GDP at which the vertical distance to the TE line is less than the vertical distance to the 45-degree line.This level of Real GDP is __________ its equilibrium level,with __________. A) above; TE TP B) above; TE TP D) below; TE

Question

On a TE-TP diagram consider a level of Real GDP at which the vertical distance to the TE line is less than the vertical distance to the 45-degree line.This level of Real GDP is __________ its equilibrium level,with __________. A) above; TE > TP B) above; TE < TP C) below; TE > TP D) below; TE < TP

Quizplus · Accepted Answer

At this level of Real GDP, since the vertical distance to the TE line is less than the vertical distance to the 45-degree line, it indicates that total expenditures (TE) are less than total production (TP), suggesting the economy is producing more than it is spending. This situation occurs above the equilibrium level, where supply exceeds demand.

On a TE-TP Diagram Consider a Level of Real GDP