- According to the Model of the Macro Economy in Figure

question 9

Multiple Choice

- According to the model of the macro economy in Figure 18.3,a shift from LRAS₁ to LRAS₂ will cause,ceteris paribus,

• A)A decrease in the level of output.
• B)A decrease in the price level.
• C)An increase in the unemployment level.

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Definitions:

X-inefficiency

The difference between efficient behavior of businesses under competitive environments versus the inefficiency that arises in the absence of competition.

Competitive Firms

Companies that operate in markets where no single firm has the power to influence the price of goods and services significantly.

Monopolistic Firms

Companies that have significant control over the market for a particular good or service, allowing them to influence price and production levels.

Economic Inefficiency

A situation where resources are not used in the most productive way, often leading to waste or a loss of potential output.