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:

Performance

The act of carrying out or accomplishing an action, task, or function.

Social Loafing

A phenomenon wherein individuals exert less effort to achieve a goal when they work in a group than when they work alone.

Challenge Response

A reaction mechanism to a challenge in which an entity (person, group, or organization) mobilizes resources and adapts to overcome the obstacle.

Threat Response

The reaction or actions taken by an individual or group when faced with a perceived danger or threatening situation.