Use the Following to Answer Questions

question 41

Multiple Choice

Use the following to answer questions .
Exhibit: Aggregate Demand and Aggregate Supply at Different Price Levels

-(Exhibit: Aggregate Demand and Aggregate Supply at Different Price Levels) The table shows the aggregate demand and short-run aggregate supply curves for an economy. The potential level of output is $7.6 trillion. If policymakers adopt a nonintervention policy, the economy gap

• A) would return to potential output at a price level of 2.8.
• B) would return to potential output at a price level of 1.2.
• C) would return to potential output at a price level of 2.0.
• D) would return to long-run equilibrium at an output level of $6 trillion.

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Definitions:

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how effectively management is using a company’s assets to create profits.

Dividend Growth Rate

The annualized percentage rate of growth of a company's dividend payments to shareholders.

Plowing Back

The reinvestment of earnings by a company back into its business rather than distributing them as dividends to shareholders.

Risk-Free Rate

The risk-free rate is the theoretical rate of return of an investment with zero risk, often represented by the yield on government bonds.