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 $400 billion?
A) It is sustainable over the long run without unemployment or deflation.
B) It is achievable only in the long run.
C) It is attainable in the short run but it is associated with decreases 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 $400 billion?
A) It is sustainable over the long run without unemployment or deflation. 
B) It is achievable only in the long run. 
C) It is attainable in the short run but it is associated with decreases in the price level. 
D) It can be achieved only if investment is independent of the interest rate.

Quizplus · Accepted Answer

An output level of $400 billion is attainable in the short run but may be associated with decreases in the price level, indicating a potential recessionary gap where actual output is below potential output.

Refer to the Information Provided in Figure 26