FIGURE 23-1 Refer to Figure 23-1

question 106

Multiple Choice

FIGURE 23-1 Refer to Figure 23-1.Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point V.The price level is P₀.Now,suppose there is an exogenous rise in the price level to .Which of the following statements describes the likely macroeconomic effects?

• A)The AE curve shifts to AE¹,a new equilibrium is established at point U,and the AD curve shifts from AD⁰ to AD¹,and equilibrium from point B to point D.
• B)The AE curve shifts to AE²,a new equilibrium is established at point W,and the economy moves from point B to point C along AD⁰.
• C)The AE curve shifts to AE¹,a new equilibrium is established at point U,and the economy moves from point B to point A along AD⁰.
• D)The AE curve shifts to AE²,a new equilibrium is established at point W,and the AD curve shifts from AD⁰ to AD¹,and equilibrium moves from point B to point D.

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Definitions:

Consumer Bill of Rights

A set of principles established to protect the interests of consumers, typically advocating for safety, the right to be informed, the right to choose, and the right to be heard.

Morally Right

Pertains to actions or behaviors that align with ethical principles and societal standards of conduct, considered fair and just.

Culture

The set of shared attitudes, values, goals, and practices that characterizes an institution, organization, or group.

Societal Culture and Norms

Refers to the shared values, customs, behaviors, and artifacts that the members of society use to cope with their world and with one another, and that are transmitted from generation to generation through learning.