Using Figure 9

question 139

Multiple Choice

Using Figure 9.9,and assuming the full-employment output level is $50 billion,

• A)There is an inflationary gap of $50 billion income.
• B)There is a recessionary gap of $50 billion income.
• C)There is an inflationary gap of $25 billion income.
• D)The economy is at macro equilibrium.

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Definitions:

Variable Costs

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

Fixed Costs

Business expenses that remain constant regardless of the level of production or sales activity, such as rent, salaries, and insurance.

Average Costs

The total cost of production divided by the number of goods produced, reflecting the average expense per unit.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production.