Figure 7-2
-Refer to Figure 7-2. The potential output in this economy is
A) $6,000 billion at a price level of 1.08.
B) $7,000 billion at a price level of 1.12.
C) $7, 100 billion at a price level of 1.16.
D) $7,056 billion at a price level of 1.08.

Question

Figure 7-2 
-Refer to Figure 7-2. The potential output in this economy is
A) $6,000 billion at a price level of 1.08. 
B) $7,000 billion at a price level of 1.12. 
C) $7, 100 billion at a price level of 1.16. 
D) $7,056 billion at a price level of 1.08.

Quizplus · Accepted Answer

The potential output is typically the level of output that an economy can produce at a stable inflation rate, often represented by the long-run aggregate supply curve. In this context, $7,000 billion at a price level of 1.12 is likely the potential output as it is a rounded figure that aligns with typical economic models.

Figure 7-2 -Refer to Figure 7-2. the Potential Output in This Economy