Consider the Basic AD/AS Model

question 16

Multiple Choice

Consider the basic AD/AS model. A rise in an input price like unit labour costs would be expected to create a new macroeconomic equilibrium, which in comparison to the original equilibrium, has a price level that is

• A)higher and a real GDP that is lower.
• B)lower and a real GDP that is lower.
• C)lower and a real GDP that is higher.
• D)higher and a real GDP that is the same.
• E)higher and a real GDP that is higher.

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Definitions:

Pseudo Expectancy

False anticipation of psychological or physiological effects, often occurring in the context of placebo effects or drug interactions.

Miscarriage

A loss of pregnancy before the fetus can survive outside the womb, typically occurring before 20 weeks of gestation.

Somatic Symptom

A physical symptom that is thought to be caused, or exacerbated, by mental factors.

Illness Anxiety

A disorder characterized by excessive concern about having a serious illness, despite medical reassurance.