What Would Happen If Employment Is Continually Above or Below

question 30

Multiple Choice

What would happen if employment is continually above or below its full-employment level?

• A) the aggregate demand curve would shift to move the economy back to full employment.
• B) the economy's self-correcting mechanism would move the economy back to full employment.
• C) the aggregate supply curve would become horizontal.
• D) the aggregate supply curve would become steeper.
• E) the economy's self-correcting mechanism would break down.

---

Definitions:

Increasing Opportunity Cost

A situation where producing more of one good or service leads to a larger increase in foregone production of another good or service.

Economic Growth

The increase in the inflation-adjusted market value of the goods and services produced by an economy over time, typically measured as the percent rate of increase in real GDP.

Full Employment

An economic situation in which all available labor resources are being used in the most efficient way possible, often characterized by the absence of cyclical unemployment.

Technology Level

A measure of the degree of sophistication and advancement of a society's tools, techniques, and methods of production.