Figure 13-4
-Refer to Figure 13-4.In the figure above,LRAS₁ and SRAS₁ denote LRAS and SRAS in year 1,while LRAS₂ and SRAS₂ denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?

Question

Figure 13-4 Figure 13-4 -Refer to Figure 13-4.In the figure above,LRAS1 and SRAS1 denote LRAS and SRAS in year 1,while LRAS2 and SRAS2 denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2? A) 8% B) 9.1% C) 10% D) 12%

Figure 13-4 -Refer to Figure 13-4.In the figure above,LRAS<sub>1</sub> and SRAS<sub>1</sub> denote LRAS and SRAS in year 1,while LRAS<sub>2</sub> and SRAS<sub>2</sub> denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2? A) 8% B) 9.1% C) 10% D) 12%

-Refer to Figure 13-4.In the figure above,LRAS₁ and SRAS₁ denote LRAS and SRAS in year 1,while LRAS₂ and SRAS₂ denote LRAS and SRAS in year 2.Given the economy is at point A in year 1,what is the growth rate in potential GDP in year 2?

Quizplus · Accepted Answer

The growth rate in potential GDP can be calculated by finding the percentage increase in the distance between the LRAS curves from year 1 to year 2. From point A, the LRAS curve shifts from LRAS₁ to LRAS₂. The distance between the two LRAS curves at point A in year 1 is 40, while the distance between the two LRAS curves at point A in year 2 is 44. Therefore, the growth rate in potential GDP is (44-40)/40 = 0.1, or 10%. The correct answer is C.

Figure 13-4 -Refer to Figure 13-4.In the Figure Above,LRAS1 and SRAS1 Denote

Figure 13-4 -Refer to Figure 13-4.In the Figure Above,LRAS₁ and SRAS₁ Denote