Table 7-1
Table 7-1 shows the aggregate demand and short-run aggregate supply curves for an economy. The potential level of output is $7.6 trillion.
-Refer to Table 7-1. If policymakers adopt a nonintervention policy, the economy gap
A) would return to potential output at a price level of 2.8.
B) would return to potential output at a price level of 1.2.
C) would return to potential output at a price level of 2.0.
D) would return to long-run equilibrium at an output level of $6 trillion.

Question

Table 7-1
  Table 7-1 shows the aggregate demand and short-run aggregate supply curves for an economy. The potential level of output is $7.6 trillion.
-Refer to Table 7-1. If policymakers adopt a nonintervention policy, the economy gap
A) would return to potential output at a price level of 2.8. 
B) would return to potential output at a price level of 1.2. 
C) would return to potential output at a price level of 2.0. 
D) would return to long-run equilibrium at an output level of $6 trillion.

Quizplus · Accepted Answer

The nonintervention policy would allow the economy to return to potential output at the current price level of 2.8.

Table 7-1 Table 7-1 Shows the Aggregate Demand and Short-Run