Refer to the Above Diagram

question 13

Multiple Choice

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:

• A)real output will rise above Q_f.
• B)the price level will rise from P₁ to P₂.
• C)it is possible that aggregate supply will shift rightward from AS₂ because nominal wage demands will rise.
• D)the price level will rise from P₂ to P₃.

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Definitions:

Lecture Notes

Written or typed summaries of the important points covered during a lecture.

Cognitive Dissonance

The discomfort in one's mind caused by holding multiple inconsistent beliefs, ideas, or values concurrently.

Attitude Change

A process in which an individual's general feelings, beliefs, or position on an issue evolve or are altered.

Cognitions

Mental processes involved in acquiring knowledge and understanding through thought, experience, and the senses, including perception, thinking, and memory.