FIGURE 23-1 Refer to Figure 23-1

question 49

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 increase in desired investment and no change in the price level.Which of the following statements describes the likely macroeconomic effects?

• A)The AE curve shifts up to AE²,the AD curve shifts to AD²,and a new equilibrium is established at point C,with real GDP at Y₂.
• B)The AE curve shifts down to AE¹,the AD curve shifts to AD¹,and a new equilibrium is established at point F,with real GDP at Y₁.
• C)The AE curve shifts to AE¹,the AD curve shifts to AD¹,and a new equilibrium is established at point E,with real GDP at Y₂.
• D)The AE curve shifts to AE²,the AD curve shifts to AD¹,and a new equilibrium is established at point F,with real GDP at Y₂.
• E)The AE curve shifts to AE²,the AD curve shifts to AD²,and a new equilibrium is established at point E,with real GDP at Y₂.

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Definitions:

Hypnotized

A state of concentration, focused attention, and increased suggestibility that is often induced by a hypnotic process, which can lead to changes in perception, memory, and behavior.

Inhibitions

Psychological mechanisms or internal processes that restrain, hinder, or suppress certain behaviors, emotions, or impulses.

Bizarre Acts

Unusual or strange behaviors that are often inexplicable and can be indicative of mental health issues.

Meditation

A practice of focused attention, mindfulness, or contemplation to achieve a mentally clear and emotionally calm state.