Exhibit 16-2 -Refer to Exhibit 16.2, Which Shows the Price Level, Real

Multiple Choice

Exhibit 16-2

-Refer to Exhibit 16.2, which shows the price level, real GDP, and potential output for an economy. According to those who favor a passive approach to policy, once the expansionary gap is eliminated, the economy will end up at _____

A) point A.
B) point B.
C) point C.
D) a point to the right of point A.
E) a point below point C.