Figure 26-12 -Refer to Figure 26-12. in the Dynamic AD-AS Model, the AD-AS

question 206

Multiple Choice

Figure 26-12
-Refer to Figure 26-12. In the dynamic AD-AS model, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in

• A) unemployment rates higher than what would occur if no policy had been pursued.
• B) inflation rates higher than what would occur if no policy had been pursued.
• C) potential real GDP levels lower than what would occur if no policy had been pursued.
• D) real GDP levels higher than what would occur if no policy had been pursued.

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Definitions:

Hawthorne Studies

A series of experiments conducted in the 1920s and 1930s that examined how different work conditions affected employee productivity, highlighting the importance of social factors and employee attention.

Worker Productivity

A measure of the efficiency of a worker or group of workers, typically evaluated in terms of the amount of output produced over a given period of time.

Economic Person

A theoretical concept in economics that depicts an individual as rationing and making decisions to maximize personal satisfaction or utility, based on the assumption of rational behavior.

Social Person

Refers to an individual who enjoys engaging with others, building relationships, and participating in social activities.