Exhibit 14-7 Aggregate supply and demand curves

-In Exhibit 14-7,choosing to operate the economy at GDP = $1200 billion and P = 110 would be opting for an economy of:
A) moderate unemployment with inflation.
B) full employment without inflation.
C) full employment with inflation.
D) high unemployment and high inflation.
E) moderate cyclical unemployment without inflation.

Question

Exhibit 14-7 Aggregate supply and demand curves
 
-In Exhibit 14-7,choosing to operate the economy at GDP = $1200 billion and P = 110 would be opting for an economy of:
A) moderate unemployment with inflation. 
B) full employment without inflation. 
C) full employment with inflation. 
D) high unemployment and high inflation. 
E) moderate cyclical unemployment without inflation.

Quizplus · Accepted Answer

Operating at GDP = $1200 billion and P = 110 suggests that the economy is at full employment with inflation, as the GDP level indicates full utilization of resources, while the price level indicates inflationary pressures.

Exhibit 14-7 Aggregate Supply and Demand Curves