The figure below shows the equilibrium in an aggregate demand-aggregate supply model.In this figure,which of the following is true for an economy that is at point V in the short run?
Figure 10.4

A)There is a recessionary gap worth $200 billion.
B)The potential output is $7 trillion.
C)The actual price level is 100.
D)The natural rate of unemployment is more than 6.8 trillion.
E)The actual output is equal to the potential output.

Question

The figure below shows the equilibrium in an aggregate demand-aggregate supply model.In this figure,which of the following is true for an economy that is at point V in the short run?​ ​
Figure 10.4

A)There is a recessionary gap worth $200 billion. 
B)The potential output is $7 trillion. 
C)The actual price level is 100. 
D)The natural rate of unemployment is more than 6.8 trillion. 
E)The actual output is equal to the potential output.

Quizplus · Accepted Answer

At point V, the actual output (Y) is equal to the potential output (Yp), which is $7 trillion. This is indicated by the intersection of the aggregate demand (AD) and aggregate supply (AS) curves at the vertical long-run aggregate supply (LRAS) curve. Therefore, there is no output gap or recessionary gap present. The actual price level is 100, which is indicated on the vertical axis. The natural rate of unemployment is not given in the figure and cannot be determined from the information provided.

The Figure Below Shows the Equilibrium in an Aggregate Demand-Aggregate