Figure 112 Shows the Relationship Between the Price Level and Real

question 69

Multiple Choice

Figure 11.2 shows the relationship between the price level and real GDP. Which of the following is the long-run equilibrium point?

• A) A point between e* and e''
• B) e''
• C) e*
• D) e'
• E) e

---

Definitions:

Free Trade

An economic policy that allows for the unrestricted import and export of goods and services between countries without tariffs or quotas.

Production Costs

The expenses involved in manufacturing a product, including raw materials, labor, and overhead.

Tariff

A tax imposed by a government on imported or exported goods to protect domestic industries or to generate revenue.

Producer Surplus

The disparity between the amount producers are prepared to take for a product or service and the amount they actually get.