Use the Figure Below to Answer the Following Questions

question 107

Multiple Choice

Use the figure below to answer the following questions.

Figure 27.2.1
There are no exports or imports in this economy.
-Refer to Figure 27.2.1. When real GDP is equal to Yb, then aggregate planned expenditure is

• A)less than real GDP, and real GDP decreases.
• B)less than real GDP, and real GDP increases.
• C)greater than real GDP, and real GDP increases.
• D)greater than real GDP, and real GDP decreases.
• E)equal to real GDP, and real GDP neither increases nor decreases.

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Definitions:

Opportunity Cost

Missing potential benefits that could have been gained from unchosen options when deciding on one.

Production Possibilities

A graphical representation that shows the maximum combination of goods or services that can be produced with a fixed amount of resources.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs representing resource allocation.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs, representing the trade-offs of allocating resources between the production of those goods.