Refer to the Graph Shown

question 7

Multiple Choice

Refer to the graph shown.In the graph, a recessionary gap exists if the price level is:

• A)P₀ and the aggregate demand curve is AD0.
• B)P₀ and the aggregate demand curve is AD1.
• C)P₁ and the aggregate demand curve is AD0.
• D)P₁ and the aggregate demand curve is AD1.

---

Definitions:

User Cost

The cost of using a capital asset, considering both the depreciation of the asset and the interest lost by investing in the asset instead of elsewhere.

Extracted

Refers to the process of removing or obtaining a resource, substance, or element from its source or original environment.

Optimal Quantity

The level of production or consumption that maximizes efficiency or benefits while minimizing costs.

Nonrenewable Resource

A natural resource that cannot be replaced at the same rate it is consumed, such as oil, coal, and natural gas.