The Output Gap Can Be Used to Estimate the Extent

question 175

Multiple Choice

The output gap can be used to estimate the extent to which the Fed misses its goal of

• A) maximum employment.
• B) stable prices.
• C) moderate long-term interest rates.
• D) monetary policy.

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Definitions:

Aggregate Supply Curve

The graphical representation of the total goods and services that producers in an economy are willing to sell at various price levels.

Price Level

The economy-wide average price for the entirety of goods and services produced.

Profit Per Unit

The amount of net income earned by selling one unit of a product, calculated as the sales price minus the cost of production per unit.

Aggregate Supply Curve

A graphical representation that shows the total quantity of goods and services that producers in an economy are willing and able to supply at different price levels.