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

---

Definitions:

Intimidation

The act of frightening someone into doing or not doing something, often used as a method of manipulation or control.

Coercion

The practice of persuading someone to do something by using force or threats, often undermining their freedom of choice.

Castigation

The act of reprimanding or punishing someone severely.

Preoperational Children

A stage in Piaget's theory of cognitive development (roughly ages 2-7) where children begin to engage in symbolic play but lack the ability to perform operations or think logically about physical operations.