Which of the Following Statements Is True

question 149

Multiple Choice

Which of the following statements is true?

• A) The long-run aggregate supply (LRAS)curve shows the Real GDP the economy is prepared to supply at different price levels,assuming wage rates and all other resource prices have fully adjusted to eliminate a recessionary or inflationary gap.
• B) Laissez-faire is a government policy of raising aggregate demand in order to eliminate a recessionary gap.
• C) An economy can operate beyond its physical PPF,but not beyond its institutional PPF.
• D) If the economy is self-regulating,it is always in long-run equilibrium.
• E) a and c

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Definitions:

Third Party

An individual or group besides the two primarily involved in a transaction or legal matter, sometimes involved as an intermediary or independent party.

Transaction

An exchange or transfer of goods, services, or funds between two or more parties.

Deadweight Losses

Efficiency losses in an economy occurring when total societal welfare is not maximized, typically as a result of market distortions like taxes or subsidies.

Competitive Equilibrium

A state in a market where demand equals supply, meaning that there's no excess supply or demand at the current price.