Table 7-1 Table 7-1 Shows the Aggregate Demand and Short-Run

question 86

Multiple Choice

Table 7-1
Table 7-1 shows the aggregate demand and short-run aggregate supply curves for an economy. The potential level of output is $7.6 trillion.
-Refer to Table 7-1. If policymakers adopt a nonintervention policy, the economy gap

• A) would return to potential output at a price level of 2.8.
• B) would return to potential output at a price level of 1.2.
• C) would return to potential output at a price level of 2.0.
• D) would return to long-run equilibrium at an output level of $6 trillion.

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Definitions:

Relative-Dating Principles

A set of techniques used in geology to determine the chronological order of events by analyzing rock layers and structures without determining their exact age.

Carbon-14 Ages

An age estimate of an organic material based on the measurement of the radioactivity of its carbon-14 content.

Granite Intrusion

The penetration of molten granite into pre-existing rocks in the Earth's crust, cooling and solidifying below the surface.

Cross-Cutting Relations

A geological principle stating that rocks disrupted or penetrated by an igneous intrusion or fault are older than the intrusion or fault itself.