-Refer to Figure 11-8.If YFE represents the full-employment level of output,what can we say about the state of the economy at Y₁?
A) It is in recession.
B) It is in expansion.
C) It is in equilibrium,but above full employment.
D) It is not in equilibrium,and output will increase.
E) It is not in equilibrium,and output will fall.

Question

-Refer to Figure 11-8.If YFE represents the full-employment level of output,what can we say about the state of the economy at Y₁?
A) It is in recession. 
B) It is in expansion. 
C) It is in equilibrium,but above full employment. 
D) It is not in equilibrium,and output will increase. 
E) It is not in equilibrium,and output will fall.

Quizplus · Accepted Answer

At Y₁, the economy is producing less than the full-employment level of output (YFE), indicating that it is in a recession.