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Refer to the Above Diagram

question 13

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  Refer to the above diagram.The initial aggregate demand curve is AD<sub>1</sub> and the initial aggregate supply curve is AS<sub>1</sub>.If government offsets the decline in real output resulting from short-run cost-push inflation by increasing aggregate demand from AD<sub>1</sub> to AD<sub>2</sub>: A) real output will rise above Q<sub>f</sub>. B) the price level will rise from P<sub>1</sub> to P<sub>2</sub>. C) it is possible that aggregate supply will shift rightward from AS<sub>2</sub> because nominal wage demands will rise. D) the price level will rise from P<sub>2</sub> to P<sub>3</sub>. Refer to the above diagram.The initial aggregate demand curve is AD1 and the initial aggregate supply curve is AS1.If government offsets the decline in real output resulting from short-run cost-push inflation by increasing aggregate demand from AD1 to AD2:

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Definitions:

Incidental Learning

The process of learning that occurs without the intention to learn, often as a byproduct of other activities.

Directed Exposure

A deliberate effort to attend to specific information sources or stimuli, usually for the purpose of obtaining information or entertainment.

Unconditioned Response

A natural, automatic reaction to a stimulus that occurs without the necessity for prior learning or conditioning.

Highly Visible

Referring to objects or actions that are easily seen or noticed by many people, often used in marketing to describe products that attract attention.

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