Refer to the Accompanying Figure

question 125

Multiple Choice

Refer to the accompanying figure. Based on the Keynesian cross diagram, at short-run equilibrium output,

• A)there is a recessionary gap.
• B)there is an expansionary gap.
• C)output equals potential output.
• D)firms will be producing more than they can sell.

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Definitions:

Variable Cost

Fees that directly alter according to the scale of production or output.

Marginal Cost

The amplification in entirety of cost following the production of an additional unit of a product or service.

Mud Statues

This refers to sculptures made from mud or clay, but in economic terms, it's not a recognized key term.

Workers

Individuals engaged in any form of employment or labor, contributing to the production of goods and services.