Figure 21-5

question 201

Multiple Choice

Figure 21-5
(a)
(b)
-Refer to Figure 21-5. In graph (a) , what is the price of good Y relative to the price of good X (i.e., P_y/P_x) ?

• A)1/4
• B)1/3
• C)3

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Definitions:

Inflationary Expectations

The anticipation by consumers and businesses of future inflation, which can influence economic behavior such as spending, saving, and investment.

Potential GDP

The maximum output an economy can produce without triggering inflation, if all resources are fully employed.

Active Approach

A strategy in investment or management that involves ongoing, dynamic decision-making and actions in order to achieve specific objectives.

Economic Stability

Economic stability refers to a state where an economy experiences steady growth, low inflation, and minimal unemployment.