The Figure Below Shows Short-Run Equilibrium in an Aggregate Demand-Aggregate

question 109

Multiple Choice

The figure below shows short-run equilibrium in an aggregate demand-aggregate supply model. If the economy is currently producing Y₁ level of output, _____.

• A) potential output is less than actual output.
• B) there is zero unemployment.
• C) the price level will rise eventually.
• D) aggregate supply will fall to restore equilibrium.
• E) the actual unemployment rate is more than the natural rate.

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Definitions:

Amputated Structure

A body part that has been surgically or traumatically removed.

Somatosensory Cortex

The somatosensory cortex is a region of the cerebral cortex involved in processing sensory information from the body, including touch, temperature, and pain.

Frontal Lobe

The region of the brain located at the front of each cerebral hemisphere, responsible for decision making, problem solving, and voluntary movements.

Temporal Lobe

A region of the cerebral cortex responsible for processing auditory information and involved in speech and memory functions.