The Figure Below Shows the Short-Run Aggregate Supply Curve of an Economy

question 29

Multiple Choice

The figure below shows the short-run aggregate supply curve of an economy. If P₃ is the price level prevailing in the economy, _____.

• A) there is an expansionary gap.
• B) there is a recessionary gap.
• C) the price level will rise.
• D) the actual unemployment rate is above the natural rate.
• E) potential output is greater than actual output.

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Definitions:

Raised

In the context of finance, refers to the collection of capital or funds for a purpose such as starting a company or launching a project.

Fixed Mindset

The assumption held by people who perceive their talents and abilities as set traits.

Carol Dweck

Carol Dweck is a psychologist known for her research on the mindset psychological trait, particularly the distinction between fixed and growth mindsets.

Process Inadequacy

The state of a workflow or procedure's failure to meet necessary standards or desired outcomes effectively.