If an increase in aggregate expenditures results in no increase in real GDP we can conclude that the:
A)economy is in a deep recession.
B)MPC equals 1.
C)economy is already operating at full employment.
D)price level has fallen.

Question

Quizplus · Accepted Answer

An increase in aggregate expenditures without an increase in real GDP indicates that the economy is already at its full employment level of output and cannot produce more goods and services. Therefore, there are no additional quantities of goods and services to be demanded and produced.

If an Increase in Aggregate Expenditures Results in No Increase