In the 2007-2009 period, the expenditure level in the United States intersected the 45-degree line below potential GDP, causing

Question

Quizplus · Accepted Answer

When the expenditure level intersects the 45-degree line below potential GDP, it indicates that the economy is operating below its full capacity. This leads to a decrease in production, which in turn results in a rise in unemployment levels. Hence, the correct answer is D) unemployment. The other options are incorrect because hyperinflation occurs when there is a significant increase in the money supply, growing trade deficit refers to an imbalance between exports and imports, and a government budget surplus indicates that the government is earning more than it is spending.

In the 2007-2009 Period, the Expenditure Level in the United