Figure 95 Alt Text for Figure 9

question 225

Multiple Choice

Figure 9.5 Alt text for Figure 9.5: In figure 9.5, a graph comparing real GDP and price level.
Long description for Figure 9.5: The x-axis is labelled, real GDP (trillions of 2007 dollars) , and the y-axis is labelled, price level (CPI) .5 lines are shown; SRAS1, SRAS2, AD1, AD2, and LRAS.Line SRAS1 begins above the vertex and slopes up to the top right corner.Line SRAS2 follows the same slope as line SRAS1, but is plotted to the right.Line AD1 begins at the top left corner and slopes down to the bottom center.Line AD2 follows the same slope as AD1, but is plotted to the right.Line SRAS1 intersects line AD1 at point C, more than half way along both the lines.Line SRAS1 intersects line AD2 at point B, approximately 3 quarters of the way along both lines.Line SRAS2 intersects line AD1 at point D, approximately 3 quarters of the way along both lines.Line SRAS2 intersects line AD2 at point A, more than half way along both lines.Line LRAS is perpendicular to the x-axis, passing through the points A and C, and intersecting all the 4 lines.
-Refer to Figure 9.5.Suppose the economy is at point A.If consumer spending increases in the economy, where will the eventual long-run equilibrium be?

• A)A
• B)B
• C)C
• D)D
• E)None of these points are long-run equilibria.

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Definitions:

Maintenance Cost

Expenses incurred in the regular upkeep and repair of equipment, buildings, or machinery to ensure efficient operation and prevent breakdowns.

Contribution Margin

The difference between the sales revenue of a product and its variable costs, used to cover fixed costs and generate profit.

Sales Revenues

The total amount of money generated from sales of goods or services before any expenses are subtracted.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and packaging.