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 an active approach to policy, once the expansionary gap is eliminated, the economy can attain equilibrium at _____

A) point A.
B) point B.
C) point C.
D) a point above point A on the SRAS curve.
E) a point below point C on the SRAS curve.