Consider the AD/AS Model and Suppose the Economy Begins at Potential

question 95

Multiple Choice

Consider the AD/AS model and suppose the economy begins at potential output.The effect of a negative AS shock on real GDP will be reversed in the long run with a ________ shift in ________.

• A)rightward; AS
• B)rightward; AD
• C)leftward; AS
• D)leftward; AD
• E)leftward; Y*

---

Definitions:

Law Of Small Numbers

A mental inclination that causes individuals to form wide-reaching conclusions based on limited data samples.

Gambler's Fallacy

The erroneous belief that if an event occurs more frequently than normal during a given period, it will happen less frequently in the future, or vice versa.

Midterms

Examinations given in the middle of an academic term to assess students' understanding of the course material up to that point.

Exceptionally Bright

Describing someone with superior intelligence, creativity, or ability, often significantly above the norm.