Figure 15.2
-Refer to Figure 15.2. For this economy to produce Y₁and sustain that level of output without inflation:

Question

Figure 15.2 -Refer to Figure 15.2. For this economy to produce Y₁and sustain that level of output without inflation:

Quizplus · Accepted Answer

In order for the economy to sustain Y₁ without inflation, potential output must increase. This means that the economy must become more efficient and productive in its use of resources. Implementing expansionary fiscal or monetary policy or decreasing the price of oil may temporarily boost output, but it would not be sustainable without an increase in potential output.

Figure 15.2 -Refer to Figure 15.2. for This Economy to Produce Y1

Figure 15.2 -Refer to Figure 15.2. for This Economy to Produce Y₁