Use the figure below to answer the following question(s).
Figure 9-2

-When an economy is experiencing the aggregate demand and supply conditions depicted in Figure 9-2,
A)the actual rate of unemployment will equal the natural rate of unemployment.
B)buyers and sellers will have correctly anticipated the level of prices P₁.
C)the output Y₁ will tend to persist into the future unless market conditions change.
D)all of the above are correct.

Question

Use the figure below to answer the following question(s).
Figure 9-2
 
-When an economy is experiencing the aggregate demand and supply conditions depicted in Figure 9-2,
A)the actual rate of unemployment will equal the natural rate of unemployment. 
B)buyers and sellers will have correctly anticipated the level of prices P₁. 
C)the output Y₁ will tend to persist into the future unless market conditions change. 
D)all of the above are correct.

Quizplus · Accepted Answer

All the statements are correct as per the Figure 9-2. The intersection of AD₁ and SRAS₁ curves is at point E, where the economy experiences both the natural rate of unemployment and the correct level of prices P₁. Also, the output level Y₁ is at the economy's Potential GDP level where it is producing at a sustainable level, and it indicates that this level of output can continue if the market conditions remain the same. Therefore, option (D) is the correct answer.

Use the Figure Below to Answer the Following Question(s)