A Constant Inflation in the AD/AS Macro Model Is Only

question 31

Multiple Choice

A constant inflation in the AD/AS macro model is only possible when

• A)AD shifts upwards at a uniform rate and AS shifts upwards at a higher uniform rate.
• B)AS shifts upward at a uniform rate and AD shifts downwards at a uniform rate.
• C)AD shifts upwards at a uniform rate and AS shifts upwards at the same uniform rate.
• D)AS shifts downward at a uniform rate and AD shifts upwards at a uniform rate.
• E)none of the above - constant inflation is not possible.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, often reflecting the cost of capital or the risk of the investment.

Present Value

The present evaluation of a future cash sum or series of cash receipts, factoring in a certain rate of return for discounting.

Interest Rate

The sum a lender charges a borrower to use assets, conveyed as a percentage of the principal's amount.

Present Value

The here and now valuation of a prospective future financial amount or series of cash flows, calculated with a certain return rate.