Figure 2-5 -Refer to Figure 2-5.It Is Not Possible for This Economy

question 46

Multiple Choice

Figure 2-5
-Refer to Figure 2-5.It is not possible for this economy to produce at point

• A)A.
• B)B.
• C)C.
• D)D.

---

Definitions:

Active Fiscal Policy

Government policy that involves altering government spending and taxation to influence the economy.

Short-run Phillips Curve

An economic model depicting an inverse relationship between the rate of unemployment and the rate of inflation in the short-term.

Potential Output

The optimum level of real gross domestic product achievable over a prolonged period without triggering higher inflation.

Expected Inflation Rate

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling, as anticipated by consumers and businesses.