The Figure Below Shows the Short-Run Aggregate Demand and Supply

question 127

Multiple Choice

The figure below shows the short-run aggregate demand and supply curves of an economy.When real GDP is at Y₂,_____.​ ​
Figure 10.2

• A)potential output is greater than actual output.
• B)there is a recessionary gap.
• C)the price level is likely to fall.
• D)the actual unemployment rate is less than the natural rate of unemployment.
• E)aggregate demand is likely to increase to restore equilibrium.

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Definitions:

Fair Market Value

The price that a property would sell for on the open market, between a willing buyer and a willing seller, each with reasonable knowledge of the pertinent facts.

Protectionism

A government policy aimed at restricting international trade to protect domestic industries from foreign competition by imposing tariffs or quotas on imports.

Outsourcing of Jobs

The practice of hiring external firms or individuals to perform tasks, handle operations or provide services that are either difficult to manage or are outside the company's core competencies.

Economic Integration

The process by which different countries reduce or eliminate barriers to trade and movement of resources among them to create a more unified and efficient market.