According to the Short-Run Aggregate Supply Curve,if Output Minus Potential

question 47

Multiple Choice

According to the short-run aggregate supply curve,if output minus potential output equals zero,then ________.

• A)unemployment might be zero
• B)inflation might be stable
• C)expected inflation must be stable
• D)price shocks must be zero
• E)none of the above

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Definitions:

GDP

Gross Domestic Product, a measure of a country's economic performance, representing the total value of all goods and services produced over a specific time period.

Exchange-Rate Effect

The impact on a country's trade balance when its currency appreciates or depreciates, affecting the price of imports and exports.

Price Level

The price level represents the average cost of goods and services across the economy at a specific point in time.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.