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The correct option that is true about the potential output level if LRAS curve showing
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Answer to Problem 25MCQ
Option a is correct.
Explanation of Solution
Explanation for correct option:
a.
Economic growth can be represented as rightward shift in the long-run
Explanation for incorrect options:
b.
Decrease in potential output level in long-run represents the economic downturn instead of growth. Therefore, option b is incorrect.
c.
If the output level is increased from it potential level then it happens in short-run aggregate supply curve. Therefore, option c is incorrect.
d.
If output level is decreased from its potential level then it happens due to short-term fluctuations. Therefore, option d is incorrect.
e.
Potential output level is increased that can be shown by shifting LRAS towards right side. Therefore, option e is incorrect.
Long-run aggregate supply curve: As per long-run aggregate supply curve, the
Chapter 7R Solutions
Krugman's Economics For The Ap® Course
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
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