Consider the Above Figure

question 296

Multiple Choice

Consider the above figure. If the aggregate demand went from AD2 to AD3, our nation would have gone from

• A) a recessionary gap to an inflationary gap.
• B) a recessionary gap to full-employment real GDP.
• C) an inflationary gap to full-employment GDP.
• D) full-employment real GDP to an inflationary gap.

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Definitions:

Limited Budget

A financial plan that is constrained by a limited amount of resources, requiring prioritization and careful management.

Utility Maximization

The economic principle whereby individuals or firms seek to allocate their resources in a way that maximizes their satisfaction or utility.

Total Utility Data

Information that measures the overall satisfaction or benefit a consumer derives from consuming a certain quantity of goods or services.

Rational Consumer

A person who systematically and logically evaluates choices to maximize their satisfaction or utility.