-Refer to the Graph Above to Answer This Question

question 94

Multiple Choice

-Refer to the graph above to answer this question.Which of the following is true?

• A)A balanced budget would occur at income level Y1.
• B)A balanced budget would occur at income level Y2.
• C)A balanced budget could occur at income levels Y1,Y2 or Y3.
• D)The existence of a balanced budget cannot be determined because no information on tax revenues is given.

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Definitions:

Short-run Phillips Curve

A graphical representation that shows the inverse relationship between the rate of inflation and the rate of unemployment in an economy over a short period.

Farthest from Origin

In geometric terms, the point on a graph that is at the greatest distance from the origin, often used metaphorically to describe extreme or outlier conditions.

Phillips Curve Analysis

An economic concept that analyzes the inverse relationship between rates of unemployment and corresponding rates of inflation.

Natural Rate

The natural rate often refers to the natural rate of unemployment, which is the level of unemployment consistent with sustainable economic growth, without accelerating inflation.