-In the Above Figure, the Economy Is at Point A the Inflation

question 120

Multiple Choice

-In the above figure, the economy is at point A. The inflation rate falls by two percentage points and people correctly anticipated the fall, perhaps because they correctly anticipated the Fed's monetary policy. As a result, the economy moves to point

• A) A, that is, there is no movement.
• B) B.
• C) C.
• D) D.

---

Definitions:

Long Run

A period in which all factors of production and costs are variable, allowing for all adjustments to be made within an economy or firm.

Fixed Input

Inputs used in production that cannot be varied in the short term, such as buildings or machinery.

Plant Size

The physical capacity or dimensions of a manufacturing facility.

Implicit Costs

They represent the opportunity costs of using resources that a company already owns, rather than the out-of-pocket expenses.