Use the Following to Answer Questions

question 2

Multiple Choice

Use the following to answer questions:
-(Figure: Inflationary and Recessionary Gaps) Refer to Figure: Inflationary and Recessionary Gaps. At E₂, the economy:

• A) is in a long-run equilibrium.
• B) has an inflationary gap.
• C) has a recessionary gap.
• D) has high unemployment.

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Definitions:

Earth's Life Support

The natural systems and processes that sustain life on Earth, including the atmosphere, hydrosphere, lithosphere, and biosphere.

Free-access Resource

Natural resources that are available to everyone, often leading to overuse and depletion because no one has the exclusive right to use them.

Global Common Resources

Natural resources not owned by any one nation and accessible to all, such as the oceans, the atmosphere, and space.

Exponential Growth

A pattern of population increase where the rate of growth is proportional to the current size, leading to rapid expansion over time.