TYP: SA Exhibit 14A-3 Macro AD-AS Model

question 6

Multiple Choice

TYP: SA
Exhibit 14A-3 Macro AD-AS Model

-In Exhibit 14A-3,the level of real GDP associated with Y₁:

• A) is equal to potential real GDP.
• B) is an inflationary gap real GDP.
• C) is a long-run equilibrium.
• D) is caused by flexible wages and prices.

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Definitions:

Liability

Anything owed to creditors—the claims of a company’s creditors.

Creditors

Individuals or institutions to whom money is owed by a debtor or borrower.

Business

Organizational entities that are involved in the trade of goods, services, or both to consumers, with the primary purpose of earning profits.

Owners' Equity

The residual interest in the assets of an entity after deducting liabilities, essentially the net worth belonging to the owners.