When the economy is in a recession caused by weak aggregate demand, we say that the economy is
operating inefficiently because it:
is growing at the Solow growth rate, which is higher than the target real growth rate.
is growing at the Solow growth rate, which is lower than the target real growth rate.
has the capital, labor, and technology to grow at the Solow growth rate, but it is growing at a
higher rate.
has the capital, labor, and technology to grow at the Solow growth rate, but it is growing at a lower
rate.