Use the Following to Answer Questions

question 103

Multiple Choice

Use the following to answer questions .
Exhibit: Using the Aggregate Demand/Aggregate Supply Model 2
-(Exhibit: Using the Aggregate Demand/Aggregate Supply Model 2) Suppose the economy is initially at K. Which of the following statements best explains how the economy responds to restore long-run macroeconomic equilibrium?

• A) Over time, the aggregate demand curve will shift to the right until long-run equilibrium is restored at J and the gap is closed.
• B) Rising unemployment puts pressure on nominal wages to fall. The SRAS curve shifts right to SRAS₁ closing the gap at H.
• C) In response to rising prices, firms will increase production moving along SRAS₂ until long- run equilibrium is restored at J and the gap is closed.
• D) Rising unemployment puts pressure on nominal wages to fall. Firms employ more workers moving along SRAS₂ until long-run equilibrium is restored at J and the gap is closed.

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Definitions:

Cohesiveness

The quality of forming a united whole, particularly in the context of group dynamics and teamwork.

Insulated Group

A group that is isolated or protected from external pressures or influences, often to maintain focus or cohesion.

Team Concept

Refers to the understanding and approach of working collaboratively with others towards a common goal.

Buy-in

Refers to the agreement and acceptance by stakeholders or team members on a particular plan or idea.