Refer to the Diagram Below

question 107

Multiple Choice

Refer to the diagram below.The initial aggregate demand curve is AD₁ and the initial aggregate supply curve is AS₁.Assuming no change in aggregate demand, the long-run response to a recession caused by cost-push inflation is best depicted as a:

• A)move from a to d along the long-run aggregate supply curve.
• B)rightward shift of the aggregate supply curve from AS₂ to AS₁.
• C)move from a to c to d.
• D)leftward shift of the aggregate supply curve from AS₁ to AS₂.

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Definitions:

Appreciation

An increase in the value of an asset over time, which can be influenced by factors like demand, inflation, and currency value changes.

Exchange Rate

An exchange rate is the value of one currency for the purpose of conversion to another currency.

Appreciated

In financial terms, it means an increase in the value of an asset or currency.

Depreciated

A decrease in the value of an asset over time due to wear and tear, age, or obsolescence.