If an Economy Is Experiencing Neither a Recessionary Gap nor an Inflationary

question 18

Multiple Choice

If an economy is experiencing neither a recessionary gap nor an inflationary gap,the real output of the economy will be reflected by

• A)the aggregate supply curve shifting to the left.
• B)the aggregate demand curve shifting to the left.
• C)the aggregate expenditure curve shifting upward.
• D)the intersection of the AD and AS curves at potential output.
• E)a point to the right of the aggregate supply curve at potential GDP.

---

Definitions:

Break-even Point

The sales level at which total revenues equate to total costs, resulting in no profit or loss, indicating the minimum sales necessary to cover all expenses.

Fixed Costs

Expenses that do not change with the level of production or sales activity, such as rent, salaries, and insurance premiums.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating how much each unit sold contributes to fixed costs and profits.

Break-even Point

The production level at which total revenues equals total expenses, resulting in neither profit nor loss.