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

question 75

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 9-2
-Which of the following is true for the economy depicted in Figure 9-2?

• A)Potential output equals y₁.
• B)It would be impossible for this economy to achieve an output greater than y₁.
• C)When output y₁ is achieved, the actual rate of unemployment will exceed the natural rate of unemployment.
• D)When output y₁ is achieved, the actual rate of unemployment will be less than the natural rate of unemployment.

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Definitions:

Equity Method

An accounting technique used by companies to assess the profits earned through their investments in other companies, reflecting these profits as income.

Dividends

Payments made by a corporation to its shareholders from its profits or reserves, usually in the form of cash or additional shares.

Recognized Gain

An increase in the value of an asset that has been sold or deemed to have increased in value officially on financial statements.

Selling Price

The amount for which a product or service is sold, not necessarily equal to the cost or intrinsic value of the item.