Exhibit 10.1 -Refer to Exhibit 10.1, Which Shows the Short-Run Aggregate Supply

Multiple Choice

Exhibit 10.1

-Refer to Exhibit 10.1, which shows the short-run aggregate supply curve of an economy. If P₃ is the price level prevailing in the economy, _____

A) there is an expansionary gap.
B) there is a recessionary gap.
C) the price level will rise.
D) the actual unemployment rate is above the natural rate.
E) potential output is greater than actual output.