Figure 12-4 -Refer to Figure 12-4. If the economy's long-run aggregate supply curve is LRAS 1 , then at Jprice level P 1 and real GDP level Y P1 , there is

At price level P1 and real GDP level YP1, the economy is at its natural level of employment, indicating no gap.

Figure 12-4 -Refer to Figure 12-4. If the economy's long-run aggregate supply curve is LRAS 1 , then at Jprice level P 1 and real GDP level Y P1 , there is

At price level P1 and real GDP level YP1, the economy is at its natural level of employment, indicating no gap.

Solved

Figure 12-4 -Refer to Figure 12-4. If the Economy's Long-Run Aggregate Supply

Question 135

Multiple Choice

Figure 12-4
-Refer to Figure 12-4. If the economy's long-run aggregate supply curve is LRAS₁, then at Jprice level P₁ and real GDP level Y_P1, there is

A) an inflationary gap.
B) an opportunity to use discretionary fiscal or monetary policy to improve the economy.
C) no gap, but the economy is not at its natural level of employment.
D) no gap, and the economy is at its natural level of employment.

Correct Answer: