Exhibit 10.1

-Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. At Y₃, _____
A) output levels are at the economy's potential.
B) output levels are less than the economy's potential.
C) unemployment is at the natural rate.
D) unemployment is higher than the natural rate.
E) unemployment is lower than the natural rate.

Question

Exhibit 10.1
 
-Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. At Y₃, _____
A) output levels are at the economy's potential. 
B) output levels are less than the economy's potential. 
C) unemployment is at the natural rate. 
D) unemployment is higher than the natural rate. 
E) unemployment is lower than the natural rate.

Quizplus · Accepted Answer

At Y₃, the output level is greater than the economy's potential, indicating that the economy is operating above full employment. This results in unemployment being lower than the natural rate.

Exhibit 10.1 -Refer to Exhibit 10.1, Which Shows the Short-Run Aggregate Supply