Which of the Following Best Depicts the Short-Run Effect of a Price

question 59

Multiple Choice

Which of the following best depicts the short-run effect of a price shock due to a large increase in oil prices?

• A)The IA line shifts up, causing interest rates to rise, which causes the AD curve to shift to the right.
• B)The IA line shifts up, causing interest rates to rise, which causes a leftward movement along the AD curve.
• C)The AD curve shifts to the left, causing interest rates to rise, which causes the IA line to shift down.
• D)The IA line shifts down, causing interest rates to rise, which causes a leftward movement along the AD curve.
• E)The IA line shifts up, causing interest rates to rise, which causes the AD curve to shift to the left.

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Definitions:

Exponential Smoothing Model

An Exponential Smoothing Model is a time series forecasting technique for univariate data that applies smoothing factors to make forecasts by weighting more recent observations more heavily.

Car Sales

The commercial activity of selling new or used cars.

Weighted Average Model

A calculation method where different values are given varying levels of importance or weights before determining the average.

Forecast Values

Predicted values generated from statistical models based on historical data.