Figure 24-4 -Refer to Figure 24-4. in the Figure Above, LRAS₁ and Above

question 122

Multiple Choice

Figure 24-4
-Refer to Figure 24-4. In the figure above, LRAS₁ and SRAS₁ denote LRAS and SRAS in year 1, while LRAS₂ and SRAS₂ denote LRAS and SRAS in year 2. Given the economy is at point A in year 1, what is the growth rate in potential GDP in year 2?

• A) 8%
• B) 9.1%
• C) 10%
• D) 12%

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Definitions:

NPV

NPV (Net Present Value) is a calculation used to determine the present value of an investment's cash inflows and outflows over time, taking into account a specific discount rate.

Variable Costs

Costs that change in proportion to the level of goods or services that a business produces.

Production

The process of creating goods or services by combining labor, materials, and technology.

Fixed Costs

Costs that do not change with the amount of goods or services produced over the short term.