Use the Following to Answer Questions

question 9

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 in short-run equilibrium at point K. If the policy-makers adopt a nonintervention policy, over time,
I. real wages will fall as long as unemployment remains above the natural rate.
II. lower nominal wages will result in a gradual shift from SRAS₂ to SRAS₁.
III. long-run equilibrium will be established at Y_P and P_h.

• A) I, II, and III
• B) I and II only
• C) II and III only
• D) III only

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Definitions:

Bad Faith

Intentional dishonest act or failure to act, which misleads or deceives others, often in legal or contractual contexts.

Course Of Performance

The conduct that occurs under the terms of a particular agreement. Such conduct indicates what the parties to an agreement intended it to mean.

Contracting Parties

Contracting parties are the individuals or entities who enter into a contract, mutually agreeing to its terms and obligations.

Non-merchants

Individuals or entities that do not engage in commercial trading or business practices as their primary occupation.