The Figure Below Shows Equilibrium in an Aggregate Demand-Aggregate Supply

question 61

Multiple Choice

The figure below shows equilibrium in an aggregate demand-aggregate supply model.Which of these statements is true if the economy described by this figure is at point M on SRAS100?

• A)The actual price level is lower than expected with a $200 billion expansionary gap.
• B)The actual price level is lower than expected with a $200 billion recessionary gap.
• C)The actual price level is higher than expected with a $200 billion recessionary gap.
• D)The actual price level is higher than expected with a $200 billion expansionary gap.
• E)The economy is in equilibrium in the short run and the long run.

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Definitions:

Wage Rates

The amount of money paid to an employee per unit of time (e.g., hour, day) or for a specific quantity of work done.

Wages

Payments made to employees for their labor or services, typically calculated on an hourly, daily, or piecework basis.

Migration

The movement of persons from one country or locality to another for the purpose of employment, better living conditions, or other reasons.