Use the figure below to answer the following questions.

Figure 26.3.3
-Refer to Figure 26.3.3. Which of the graphs illustrates an above full-employment equilibrium?
A)(a)only
B)(b)only
C)(c)only
D)(d)only
E)both (c)and (d)

Question

Use the figure below to answer the following questions.
  
Figure 26.3.3
-Refer to Figure 26.3.3. Which of the graphs illustrates an above full-employment equilibrium?
A)(a)only 
B)(b)only 
C)(c)only 
D)(d)only 
E)both (c)and (d)

Quizplus · Accepted Answer

Both graphs (c) and (d) illustrate an above full-employment equilibrium because they both show output levels above the potential output level (Yp). In both cases, the economy is producing more than it is capable of producing in the long run, which can lead to inflationary pressures.

Use the Figure Below to Answer the Following Questions