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. In this Exhibit, if P₁ is the price level prevailing in the economy, it implies that _____

A) there is an expansionary gap.
B) the price level will decrease.
C) the actual unemployment rate is equal to the natural unemployment rate.
D) the actual unemployment rate is below the natural unemployment rate.
E) the actual rate of output is more than the potential output.