Figure 12-1 -Refer to Figure 12-1. at Output Level Y₁

question 148

Multiple Choice

Figure 12-1
-Refer to Figure 12-1. At output level Y₁,

• A) potential output is greater than actual output.
• B) the economy is operating at a point outside its production possibilities curve.
• C) the actual unemployment rate is less than the natural rate of unemployment.
• D) aggregate demand will fall to restore equilibrium.

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Definitions:

Fixed Asset Investments

Long-term investments in tangible assets such as property, plant, and equipment, intended for use in operations.

Trade-In Allowance

The value subtracted from the price of a new item when an old item is given as part of the deal.

Book Value

The net value of an asset or company calculated by total assets minus intangible assets (patents, goodwill) and liabilities.

Accumulated Depreciation

The total amount of depreciation expense that has been charged to a fixed asset since it was in service, reducing its book value.