Figure 7-7 -Refer to Figure 7-7. at Output Level Y_K

question 152

Multiple Choice

Figure 7-7
-Refer to Figure 7-7. At output level Y_K,

• A) the economy is not in equilibrium because it operates with an output gap.
• B) the economy is in short-run equilibrium and it operates with an inflationary gap.
• C) the economy is in short-run equilibrium and it operates with a recessionary gap.
• D) the economy is not in equilibrium because the unemployment rate is below the natural rate of unemployment.

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Definitions:

Continental Rifts

Areas where the Earth's crust is stretching and splitting apart, leading to the formation of new oceanic crust.

Felsic

Refers to igneous rocks that are rich in silica and light in color, including granite and rhyolite.

Mafic Magma

Refers to a type of magma that is rich in magnesium and iron, characterized by its dark color and low viscosity.

Subduction Zones

Areas where one tectonic plate is being forced down into the mantle by another plate, often associated with volcanic activity and earthquakes.