Use the figure below to answer the following question(s). Figure 9-2 When an economy is experiencing the aggregate demand and supply conditions depicted in Figure 9-2, A) the actual rate of unemployment will equal the natural rate of unemployment. B) buyers and sellers will have correctly anticipated the level of prices P₁. C) the output y₁ will tend to persist into the future unless market conditions change. D) all of the above are correct.

Question

Quizplus · Accepted Answer

A) The figure does not provide information on the actual rate of unemployment or the natural rate of unemployment. B) The figure does not provide information on whether buyers and sellers correctly anticipated the level of prices. C) The figure shows that the economy is operating at potential output (y₁), which implies that there is no output gap. This means that the output level is sustainable in the long run unless there are changes in market conditions. Thus, all of the above choices are correct.

Use the Figure Below to Answer the Following Question(s)