The Diagram Below Shows an AD/AS Model for a Hypothetical

question 75

Multiple Choice

The diagram below shows an AD/AS model for a hypothetical economy.The economy begins in long-run equilibrium at point A. FIGURE 24-4 Refer to Figure 24-4.Following the positive AS shock shown in the diagram,the adjustment process will take the economy to a long-run equilibrium where the price level is ________ and real GDP is ________.

• A)60; 1000
• B)60; 1300
• C)90; 750
• D)90; 1200
• E)110; 1000

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Definitions:

Inertia Effect

The tendency of an object or process to continue in its current state, whether at rest or in motion, unless acted upon by an external force.

Cohabitation

The condition of cohabiting and engaging in a sexual relationship without the bond of marriage.

Cohabitants

People in a romantic partnership cohabiting without formal marriage.

Divorced

The state of being legally separated from one’s spouse, following the dissolution of a marriage.