Which of the Following Would Be a Direct Result of Real

Multiple Choice

Which of the following would be a direct result of real GDP being above potential GDP?

A) Firms would raise their prices and there would be a subsequent rise in inflation.
B) Firms would lower their prices and there would be a subsequent decrease in inflation.
C) Government spending would decline.
D) None of the above would be a result.
E) Real GDP can never be above potential GDP.