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If potential output exceeds actual real output by a wide margin, this implies: Select one: a....

If potential output exceeds actual real output by a wide margin, this implies:
Select one:
a. an excess of imports over exports
b. a high rate of unemployment
c. that the majority of consumer demand has changed from goods to services
d. a sharply rising price level
e. that the majority of consumer demand has changed from services to goods
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Answer #1

Ans: b ) a high rate of unemployment

Explanation:

If potential output exceeds actual real output by a wide margin, then there will be recession in the economy. It leads negative output gap. It means the economy is producing below its production possibilities frontier. As a result there will be a high rate of unemployment

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