The Diagram Below Shows an AD/AS Model for a Hypothetical

question 60

Multiple Choice

The diagram below shows an AD/AS model for a hypothetical economy which is initially in a short-run equilibrium at point A. FIGURE 24-6
-Refer to Figure 24-6.If the government takes no action to change the short-run macro equilibrium in this economy,then

• A)the AD curve will shift downward until it intersects with the AS curve at point E.
• B)the AD curve will shift upward until it intersects with the AS curve at point C.
• C)the AS curve will shift to the left until it intersects with the AD curve at point D.
• D)the AS curve will shift to the right until it intersects with the AD curve at point B.
• E)the AS curve can either shift to the right or left depending on the fiscal policy.

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Definitions:

Ultra Vires

Acts performed outside or beyond the powers of the legal authority or corporation’s capabilities.

Consideration

Something of value that is exchanged between parties in a contract, making the agreement legally binding.

Illegal

Activities or actions that are prohibited by law and subject to penalties or punishment.

Majority

The condition or state of being greater in number, amount, or part; often refers to the age at which a person acquires full legal rights, or to a voting group having more than half the votes.