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.

---

Definitions:

Grab Bars

Safety devices installed in bathrooms or other areas to assist individuals in maintaining balance, decreasing fatigue, and preventing falls.

Scatter Rugs

Small area rugs or mats, often decorative, placed in various areas within a home to add comfort or aesthetic appeal.

Smoke Alarms

Devices designed to detect smoke as an indicator of fire, providing early warning signals to occupants of a building for safety.

Right Hemisphere Stroke

A stroke occurring in the right side of the brain, potentially affecting spatial awareness, judgment, and/or mobility on the left side of the body.