-The Figure Above Shows the Aggregate Demand, Short-Run Aggregate Supply

question 92

Multiple Choice

-The figure above shows the aggregate demand, short-run aggregate supply, and long-run aggregate supply curves for the U.S. economy. The economy is currently at point A. A
Demand-pull rise in the price level will initially move the economy to point ___________and to point___________

• A) E; A when aggregate demand changes
• B) E when aggregate demand increases; D when the wage rate rises
• C) C when the wage rate rises; D when aggregate demand increases
• D) B when aggregate demand decreases; C when the wage rate rises

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Definitions:

Negotiations

The process by which parties with differing interests arrive at a mutual agreement or compromise through discussion and bargaining.

Liability Rule

A legal framework in which an infringer must compensate the owner for unauthorized use of property, typically applied in cases of copyright or patent infringements.

Injunction

A court order forbidding the continuation of behavior that leads to damages.

Coase Theorem

An economic theory that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient allocation of resources regardless of the initial distribution of property rights.