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:

Educational Institutions

Organizations dedicated to the instruction and training of students in various fields of study.

Fully-Funded Pension Plan

A pension plan that has enough assets to provide for all accrued benefits owed to participants.

Equities

Shares of ownership in a company, representing a claim on part of the company's assets and earnings.

Contingent Immunization

A mixed passive-active strategy that immunizes a portfolio if necessary to guarantee a minimum acceptable return but otherwise allows active management.