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:

Interest Earned

The amount of money generated as income on an investment, savings, or lending over a specified period.

Compounded Annually

Interest calculated on the initial principal and also on the accumulated interest from previous periods within a year.

Home Ownership Savings Plan (HOSP)

A savings plan designed to help individuals accumulate funds towards the purchase of a home.

Quarterly

Occurring every three months or constituting one-fourth of a year.