-Based on the Diagram Above,an Economy in Short-Run Equilibrium at Point

question 133

Multiple Choice

-Based on the diagram above,an economy in short-run equilibrium at point A has a(n) ___________ gap.The gap could be eliminated by the self-correcting mechanism of the model and eventually achieve a long-run equilibrium at point ________,or the central bank could intervene with monetary "easing" and the long-run equilibrium would be at point ________.

• A) recessionary;B;C
• B) recessionary;C;B
• C) recessionary;C;C
• D) expansionary;B;C
• E) expansionary;C;B

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Definitions:

Full Employment

A situation where all available labor resources are being used in the most economically efficient way.

Efficient

Optimal productivity with minimal waste of resources, achieving the best possible outcome with the inputs available.

Production Possibility Frontier

A graphical representation showing the maximum combination of goods or services that can be produced with a given set of resources.

Technology Improvement

Technology Improvement refers to the enhancement or development of new technologies or the improvement of existing ones, leading to more efficient processes, products, or services.