Exhibit 16-5 -If the Economy Pictured in Exhibit 16-5 Is in Equilibrium

question 73

Multiple Choice

Exhibit 16-5
-If the economy pictured in Exhibit 16-5 is in equilibrium where AD = SRAS, then it

• A)is experiencing a contractionary gap
• B)will experience an increase in the price level if no government action is taken
• C)is operating at the potential level of output
• D)will experience a stable price level if no government action is taken
• E)is operating at less than the economy's potential level of output

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