The Figure Below Shows the Short-Run Aggregate Supply Curve of an Economy.If

question 5

Multiple Choice

The figure below shows the short-run aggregate supply curve of an economy.If the actual price level exceeds the expected price level,then:

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• A)equilibrium output is likely to be Y2 in the short run.
• B)equilibrium output is likely to be Y1 in the short run.
• C)equilibrium output is likely to be Y3 in the short run.
• D)potential output is greater than actual output.
• E)unemployment is above the natural rate.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded.

Luxury Yachts

High-end, luxurious boats equipped with sophisticated amenities, designed for comfort and leisure.

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved or is unachievable.

Elastic

Describes a situation in which the demand or supply for a good or service significantly changes in response to a change in price.