Refer to the information provided in Figure 26.7 below to answer the question(s) that follow. Figure 26.7
-Refer to Figure 26.7. Which of the following statements characterizes an output level of $800 billion?
A) It is sustainable over the long run without inflation.
B) It is achievable only in the long run.
C) It is attainable in the short run but it is associated with increases in the price level.
D) It can be achieved only if investment is independent of the interest rate.

Question

Refer to the information provided in Figure 26.7 below to answer the question(s) that follow.  Figure 26.7
-Refer to Figure 26.7. Which of the following statements characterizes an output level of $800 billion?
A) It is sustainable over the long run without inflation. 
B) It is achievable only in the long run. 
C) It is attainable in the short run but it is associated with increases in the price level. 
D) It can be achieved only if investment is independent of the interest rate.

Quizplus · Accepted Answer

According to the graph, an output level of $800 billion can be attained in the short run but it is associated with increases in the price level. This implies that there will be inflationary pressures in the short run to achieve this level of output.

Refer to the Information Provided in Figure 26