True or False QuestionTrue or false: If the price level is below macroeconomic equilibrium, there will be a surplus of real GDP.True false question.TrueFalse

Analysis

1. Understanding Macroeconomic Equilibrium: Macroeconomic equilibrium occurs when the aggregate supply equals aggregate demand. At this point, the economy is producing at its potential output, and there are no forces creating pressure for prices to either rise or fall.

2. Effect of Price Levels Below Equilibrium: If the price level is below this equilibrium, it means that the overall prices of goods and services are lower than what is necessary to match the quantity of goods and services demanded with the quantity supplied.

3. Surplus vs. Shortage: When prices are below the equilibrium level, the quantity demanded generally exceeds the quantity supplied, resulting in a shortage, not a surplus.

Conclusion

Given the understanding of macroeconomic principles, if the price level is below macroeconomic equilibrium, there will be a shortage of real GDP rather than a surplus.

Final Answer

False: If the price level is below macroeconomic equilibrium, there will not be a surplus of real GDP; there will be a shortage.