The Figure Below Shows Equilibrium in an Aggregate Demand-Aggregate Supply

question 148

Multiple Choice

The figure below shows equilibrium in an aggregate demand-aggregate supply model. Which of these statements is true if the economy described by this figure is at point M on SRAS100?

• A) The actual price level is lower than expected with a $200 billion expansionary gap.
• B) The actual price level is lower than expected with a $200 billion recessionary gap.
• C) The actual price level is higher than expected with a $200 billion recessionary gap.
• D) The actual price level is higher than expected with a $200 billion expansionary gap.
• E) The economy is in equilibrium in the short run and the long run.

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Definitions:

Independent

Free from external control or influence; capable of thinking or acting for oneself.

Synthetic Thinking

The ability to put together separate pieces of information, concepts, or ideas to form a cohesive whole or new insights.

Systems Theorists

Scholars who study the interrelated components of systems, focusing on how parts interact within a whole.

Inside-out

An approach or perspective that starts from within an organization and works toward its external environment, focusing on leveraging internal strengths.