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

At the intersection of LRAS 1 and P 1 , there is no gap between the actual output level and the potential output level, and the economy is at its natural level of employment.

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

At the intersection of LRAS 1 and P 1 , there is no gap between the actual output level and the potential output level, and the economy is at its natural level of employment.

Solved

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

Question 132

Multiple Choice

Figure 12-4
-Refer to Figure 12-4. If the economy's long-run aggregate supply curve is LRAS₁, then at
Price 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: