Figure 4-13 -Refer to Figure 4-13.If the Supply Curves That Are Drawn

question 315

Multiple Choice

Figure 4-13

-Refer to Figure 4-13.If the supply curves that are drawn represent supply curves for single-family residential houses,then the movement from S to S' could be caused by a(n)

• A) increase in the price of apartments which are a substitute for single-family houses for many people looking for a place to live.
• B) newly-formed expectation by house-builders that prices of houses will increase significantly in the next six months.
• C) decrease in the price of lumber.
• D) All of the above are correct.

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Definitions:

Potential GDP

Potential GDP is the maximum possible output an economy can produce with full employment of its resources, without causing inflation.

Actual GDP

The total market value of all goods and services produced within a country in a specific period, measuring the economy's real output without adjustment for inflation.

Self-correcting Forces

Economic mechanisms that naturally work to restore equilibrium in markets without government intervention.

Potential GDP

The maximum output an economy can produce without triggering inflation, if it fully employs all available resources, including labor and capital.