Use the Following to Answer Questions

question 54

Multiple Choice

Use the following to answer questions:
-(Table: Price Levels) Use Table: Price Levels. What is the rate of inflation from 2013 to 2014?

• A) 1.1%
• B) 2.6%
• C) 2.9%
• D) 2.0%

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Definitions:

MPC

Marginal Propensity to Consume, a measure in economics that indicates the proportion of additional income that a household is likely to spend on consumption rather than saving.

Full Employment GDP

Refers to the maximum level of output that an economy can produce without causing inflation, when unemployment is at its natural rate.

Equilibrium GDP

Equilibrium GDP is the level of real GDP where aggregate demand equals aggregate supply, indicating a state of economic balance without excess demand or supply.

Inflationary Gap

The difference between the actual output of an economy and the maximum potential output it could achieve with full employment of resources, leading to inflation.