Figure 27-5 -Refer to Figure 27-5. in the Dynamic Model of AD-AS

question 106

Multiple Choice

Figure 27-5
-Refer to Figure 27-5. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, and no fiscal or monetary policy is pursued, then at point B

• A) the unemployment rate is very low.
• B) firms are operating below capacity.
• C) the economy is above full employment.
• D) income and profits are definitely rising.
• E) there is pressure on wages and prices to rise.

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Definitions:

Neural Areas

Specific regions within the brain that are responsible for processing various types of cognitive and physiological functions.

Hypothalamus

A region of the brain responsible for hormonal control, regulation of body temperature, hunger, thirst, and other homeostatic systems.

Ghrelin

A substance primarily generated by the stomach, which encourages the feeling of hunger and communicates the need to eat to the brain.

Huge Appetite

An unusually large desire to consume food, which can be driven by physiological, psychological, or emotional factors.