Exhibit 15-1

-Refer to the graph in the exhibit.According to policymakers who favour an active approach to policy, where will the economy end up when potential output is achieved?
A) at point A
B) at point B
C) at point C
D) CANNOT tell from the information provided

Question

Exhibit 15-1
 
-Refer to the graph in the exhibit.According to policymakers who favour an active approach to policy, where will the economy end up when potential output is achieved?  
A) at point A 
B) at point B 
C) at point C 
D) CANNOT tell from the information provided

Quizplus · Accepted Answer

Policymakers who favour an active approach to policy aim to achieve potential output by increasing aggregate demand through expansionary monetary or fiscal policies. Point B represents a higher level of output and lower unemployment rate, which is consistent with achieving potential output.

Exhibit 15-1 -Refer to the Graph in the Exhibit.According to Policymakers Who