When the AD and SAS Curves Intersect at a Level

question 340

Multiple Choice

When the AD and SAS curves intersect at a level of real GDP which exceeds potential GDP and there is no government policy undertaken, which of the following will occur?

• A) The AD curve shifts leftward because the money wage rate rises.
• B) The AD curve shifts rightward because the Fed decreases the money supply.
• C) The SAS curve shifts leftward because the money wage rate rises.
• D) The AS curve shifts leftward because the money wage rate falls.

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Definitions:

Peritoneal Cavity

An enclosed body space within the abdomen, lined by the peritoneum, containing organs and fluid.

Mesentery

A fold of tissue that attaches organs to the body wall, supplying them with blood vessels and nerves.

Directional Terms

Terms used to describe the location of one body part in relation to another, often used in anatomy and medicine.

Inferior

Pertains to a lower position or location in the body.