Use the Figure Below to Answer the Following Question(s)

question 36

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 9-2
-Figure 9-2 indicates that the output of the economy, y₁, is

• A)greater than the economy's long-run capacity.
• B)equal to the economy's long-run capacity.
• C)less than the economy's long-run capacity.
• D)in short-run equilibrium but not long-run equilibrium.

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Definitions:

Utility Function

A mathematical representation that ranks an individual's preferences over a set of goods and services, aiming to measure satisfaction or happiness.

Consumption

Households' utilization of goods and services.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money they borrow from a lender.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.