The SRAS Is Horizontal at a Price Level of 2

question 52

Multiple Choice

The SRAS is horizontal at a price level of 2.
-According to the AD-AS model,the economy depicted above has a short-run equilibrium output of ___________ and a(n) ___________ gap equal to ___________.

• A) 550;expansionary;50
• B) 600;recessionary;0
• C) 600;expansionary;50
• D) 650;expansionary;100
• E) 600;recessionary;100

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Definitions:

Notes Payable

A formal written agreement in which one party agrees to pay another a specific sum of money, either on demand or at a determined future date.

Interest-Bearing Note

A debt instrument that pays interest to the holder until its maturity date.

Issuance of Note

The act of creating a promissory note by which a borrower agrees to pay back a lender according to set terms.

Discounted Note

A promissory note whose proceeds are less than its face value due to interest being deducted in advance.