Exhibit 15-3 -If the Economy Pictured in Exhibit 15-3 Is in Equilibrium

Multiple Choice

Exhibit 15-3
-If the economy pictured in Exhibit 15-3 is in equilibrium where AD = SRAS,then it

A) is experiencing a contractionary gap
B) will experience an increase in the price level if no government action is taken
C) is operating at the potential level of output
D) will experience a stable price level if no government action is taken
E) is operating at less than the economy's potential level of output