Refer to the information provided in Figure 12.8 below to answer the questions that follow. Figure 12.8 -Refer to Figure 12.8.If the economy is currently at Point D producing output level Y₂,which of the following is NOT true? A)The economy is operating below full employment. B)Input prices are likely to fall. C)Aggregate supply shifts to the right and the economy ends up at Point E. D)The economy is operating above full employment.

Question

Quizplus · Accepted Answer

If the economy is currently at Point D producing output level Y₂, then it is operating above full employment as it is producing beyond its potential output level. Therefore, option D is not true. Input prices are likely to rise in this scenario, not fall. Aggregate supply will not shift to the right as the economy is already producing beyond its potential output level.

Refer to the Information Provided in Figure 12