Consider the Basic AD/AS Model

question 108

Multiple Choice

Consider the basic AD/AS model. Suppose that a rising percentage of high- school graduates are illiterate, resulting in a decrease in average labour productivity. This change will

• A)shift the AD curve to the right.
• B)shift the AS curve to the right.
• C)shift the AS curve to the left.
• D)shift the AD curve to the left.
• E)cause a movement to the right along the AS curve.

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Definitions:

Provisions

Estimates of future costs or liabilities that a company recognizes on its financial statements, reflecting expected obligations.

Conflicts of Interest

Situations where an individual's or organization's responsibilities or interests conflict, potentially compromising decision-making or actions.

Default Risk

The risk that a debtor will not make the required payments on their obligations, leading to financial loss for the creditor.

Higher Interest Rates

Increased costs of borrowing which can impact loan demand, savings rates, and overall economic activity.