The Diagram Below Shows Alternate Paths for Two Hypothetical Economies,each

question 8

Multiple Choice

The diagram below shows alternate paths for two hypothetical economies,each starting with GDP of $1 billion.Assume that Area 1 is equal to Area 2. FIGURE 25-1 Refer to Figure 25-1.Which of the following statements best describes what we know about the difference between the two economies at Year 0?

• A)Economy A has a higher level of real GDP at Year 0 than Economy B.
• B)Economy B's households are consuming a larger percentage of GDP than Economy A's households.
• C)There is no opportunity cost for economic growth for Economy B at Year 0.
• D)There is no opportunity cost of economic growth for Economy A at Year 0.
• E)Economy A's households are consuming a larger percentage of GDP than Economy B's households.

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Definitions:

Kraft Lunchables

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Prepackaged Meal

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