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When an Economy Fails to Produce at Its Potential

question 88

Multiple Choice

When an economy fails to produce at its potential,
I. there may be actions that the government or the central bank can take to push the economy toward its potential.
II. the unemployment rate is below its natural rate.
III. the average price level is likely to rise.


Definitions:

Laws

Rules and guidelines, established by a community or authority, governing behavior.

Static

Persistent or unchanging conditions; in electronics, it refers to random noise that can interfere with signal clarity.

Stability

The state or quality of being resistant to change, especially sudden change or deterioration, within a particular environment or context.

Society

A group of individuals involved in persistent social interaction, or a large social group sharing the same geographical or social territory, typically subject to the same political authority and dominant cultural expectations.

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