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

question 119

Multiple Choice

The diagram below shows an AD/AS model for a hypothetical economy which is initially in a short-run equilibrium at point A. FIGURE 24-7 Refer to Figure 24-7.If the government takes no action to close the existing output gap,then

• A)the AD curve will shift down until it intersects with the AS curve at point D.
• B)the AD curve will shift up until it intersects with the AS curve at point B.
• C)the AS curve will shift to the left until it intersects with the AD curve at point C.
• D)the AS curve will shift to the right until it intersects with the AD curve at point E.
• E)the AS curve can either shift to the right or left depending on the fiscal policy.

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Definitions:

Employment Opportunities

Refers to the availability of jobs and career prospects within an economy or specific sector.

Homosocial Reproduction

The tendency of people in positions of power to select or favor others who share similar backgrounds, interests, or characteristics, particularly in relation to gender.

Positions of Power

Roles or statuses within a society, organization, or group that grant individuals authority, influence, and the ability to make decisions that affect others' lives or operations.

Like Themselves

An inclination towards connecting with or favoring individuals who share similar traits, characteristics, or interests; related to the concept of homophily.