Figure 35-1

question 17

Multiple Choice

Figure 35-1.The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves.On the right-hand diagram,U represents the unemployment rate.
-Refer to Figure 35-1.The curve that is depicted on the right-hand graph offers policymakers a "menu" of combinations

• A)that applies both in the short run and in the long run.
• B)that is relevant to choices involving fiscal policy,but not to choices involving monetary policy.
• C)of inflation and unemployment.
• D)All of the above are correct.

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Definitions:

Most Efficient Output

The level of production where average total costs are minimized.

Explicit Costs

These are direct monetary payments a firm makes to purchase inputs for its production, such as wages, rent, and materials.

Implicit Costs

The opportunity costs of using resources already owned by the firm for production, as opposed to external spending.

Economic Profit

The difference between revenue generated from output and the opportunity costs of inputs used, considering both explicit and implicit costs.