When prices of outputs in an economy become sufficiently high, causing production to exceed potential GDP, the results is that hyper-intense production will be unsustainable in the long run. Therefore, option (C) is the correct answer.
Inflationary pressure is produced in an economy when actual real GDP or output surpasses potential real GDP. The various economic participants are forced to raise their inflationary expectations as a result of this inflationary pressure. Workers are significant contributors to the economy, and they also raise their expectations for inflation. Workers seek greater pay in order to maintain their real income because they anticipate increased inflation in the future. As businesses give in to the demand for greater pay, their production costs rise and their profitability decreases. Reduced profitability forces businesses to cut back on production. A decrease in production causes the short-run aggregate supply curve to move to the left. However, until the economy returns to its level of potential real GDP, the SRAS curve's leftward movement will persist.
Therefore, the economy maintains its potential GDP level over the long term, and the spike in output (the current real GDP exceeding the potential real GDP) continues to be a phenomenon of the short term.
Therefore, hyper-intense production will be unsustainable over the long term when output prices in an economy rise to a level that causes production to surpass potential GDP. Hence, the correct answer is option (C).
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