-An Economy Is at Potential GDP and the Price Level

question 357

Multiple Choice

-An economy is at potential GDP and the price level is 100 in the figure above. If aggregate demand unexpectedly increases so that the aggregate demand curve shifts to AD₁, the inflation rate is
)

• A) 20 percent a year
• B) 10 percent a year
• C) 0 percent a year
• D) More than 20 percent a year

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Definitions:

Planes

Flat, two-dimensional surfaces that extend infinitely, or a reference to different levels or areas of thought, existence, or development.

Proximity

The physical or psychological closeness between people, objects, or ideas, which can influence their interaction and relationship.

Grouping

The cognitive process of organizing objects or thoughts into groups based on common attributes, which is fundamental to perception and pattern recognition.

Perceptual Organization

The process by which the brain structures and interprets sensory information to represent the environment.