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.

• A) I, II, and III
• B) I and II only
• C) I and III only
• D) I only

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