The Level of Potential Output and Location of the Long-Run

question 156

Multiple Choice

The level of potential output and location of the long-run aggregate supply curve are determined by

• A) Federal Reserve policy.
• B) the price level.
• C) the intersection of aggregate demand and short-run aggregate supply.
• D) the natural rate of unemployment.

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Definitions:

Ultimate Authority

The highest level of power or the most authoritative figure or institution in a specific context or system.

Dual Federalism

A political arrangement in which state and national governments are seen as distinct entities providing separate spheres of governance, with little overlap.

Sponge Cake

A light, fluffy cake made with eggs, sugar, and flour, often served as a dessert or with tea.

Layer Cake

A metaphor often used in political science to describe a clear-cut division of responsibilities and powers among different levels of government, similar to the distinct layers in a layer cake.