Use the Figure Below to Answer the Following Question(s)

question 23

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 10-16

-Suppose an economy is currently operating at output Y₁ associated with AD₁ and SRAS₁,shown in Figure 10-16.Initially,the output of this economy is

• A)above its potential,and the rate of unemployment is greater than the natural rate.
• B)below its potential,and the rate of unemployment is greater than the natural rate.
• C)above its potential,and the rate of unemployment is less than the natural rate.
• D)below its potential,and the rate of unemployment is less than the natural rate.

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Definitions:

Market Value

The current price at which an asset or service can be bought or sold in the market.

Depreciation

Depreciation is the accounting process of allocating the cost of tangible assets over their useful lives, reflecting the loss of value as the asset is used.

Capitalized

The process of recording a cost or expense as an asset on the balance sheet, rather than immediately expensing it, typically to spread the cost over its useful life.