Suppose the Following Conditions Are Present in the Economy: -

question 93

Multiple Choice

Suppose the following conditions are present in the economy: - firms are increasing output to meet rising demand for their goods
- workers are able to demand higher wages as firms try to bid workers away from other firms
Which of the following statements describes the adjustment that will happen in the AD/AS macro model?

• A)There is an inflationary output gap; aggregate demand will continue to increase,causing the AD curve to shift to the right.The price level will rise until equilibrium is restored at .
• B)The economy is in equilibrium at ,but wages are rising.The AS curve will shift to the left until a new equilibrium is reached at a higher price level.
• C)There is a recessionary output gap; wages and other factor prices will rise; the AS curve will shift to the left until equilibrium is restored at .
• D)There is an inflationary output gap; wages and other factor prices will rise; the AS curve will shift to the left until equilibrium is restored at .
• E)There is a recessionary output gap; aggregate demand will rise,causing the AD curve to shift to the right until equilibrium is restored at .

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Definitions:

Kohlberg's Stage

Refers to one of the stages in Lawrence Kohlberg's theory of moral development, detailing the progression of moral reasoning from childhood through adulthood.

Logical

Relates to the use of reasoning in accordance with the principles of logic, often implying a clear, reasoned, and methodical approach to problem-solving.

Cleaning Room

The act of organizing, tidying, and removing dirt from a room to maintain a clean and pleasant environment.

Universal-ethical Principles

Moral principles that are considered to be universal and apply to all individuals, regardless of culture, society, or personal circumstance.