Refer to the information provided in Figure 12.7 below to answer the questions that follow.
Figure 12.7
-Refer to Figure 12.7.Potential output
A)is $400 million.
B)is $700 million.
C)is $800 million.
D)cannot be determined from this information because aggregate demand is not given.

Question

Refer to the information provided in Figure 12.7 below to answer the questions that follow.
  Figure 12.7
-Refer to Figure 12.7.Potential output
A)is $400 million. 
B)is $700 million. 
C)is $800 million. 
D)cannot be determined from this information because aggregate demand is not given.

Quizplus · Accepted Answer

The potential output is represented by the 45-degree line in the graph and is equal to $700 million. This is where the economy would produce if all resources were fully employed.

Refer to the Information Provided in Figure 12