Author Question: If strong aggregate demand is pushing the economy beyond potential real GDP, which of the following ... (Read 55 times)

Caiter2013 · **on:** Jun 29, 2018

If strong aggregate demand is pushing the economy beyond potential real GDP, which of the following must be true?

A) Expansionary monetary policies will push the economy back to the long-run Phillips curve.
B) The economy is at an equilibrium that is not on the long-run Phillips curve.
C) The economy is at an equilibrium that is on the long-run aggregate supply curve.
D) The economy is at an equilibrium that is on the long-run Phillips curve.

Question 2

Refer to Figure 23-2. Suppose that the level of GDP associated with point K is potential GDP. If the U.S. economy is currently at point N,

A) firms are operating below capacity.
B) the economy is in an expansion.
C) the level of unemployment is above the natural rate.
D) the economy is at full employment.