Figure 10-17
Suppose an economy is currently operating at output Y1 associated with AD1 and SRAS1, shown in . Initially, the output of this economy is
a.
above its potential, and the rate of unemployment is greater than the natural rate.
b.
below its potential, and the rate of unemployment is greater than the natural rate.
c.
above its potential, and the rate of unemployment is less than the natural rate.
d.
below its potential, and the rate of unemployment is less than the natural rate.
c
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We can approximate the real return on an investment by subtracting the inflation rate from the nominal return on the investment
For example, an investment that returns 10% per year while inflation is 4% per year has a real (inflation adjusted) return of approximately 6%. Which of the following outcomes is NOT possible? A) Nominal and real returns are positive B) Nominal return is positive, real return is negative C) Nominal return is negative, real return is positive D) all of these outcomes are possible
An example of price floor is
a. Minimum wages b. Rent controls in New York c. Both a and b d. None of the above