-An Economy Is at Potential GDP and the Price Level

question 93

Multiple Choice

-An economy is at potential GDP and the price level is 100 in the figure above. If aggregate demand unexpectedly increases so that the aggregate demand curve shifts to AD1, the inflation rate is________.

• A)0 per cent a year
• B)10 per cent a year
• C)20 per cent a year
• D)more than 20 per cent a year

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Definitions:

Normal Distribution

A bell-shaped curve that represents the distribution of many types of data where most values cluster around a central mean.

X-axis

The horizontal axis in a coordinate system, typically used to represent the independent variable in a graph.

Median

The middle value in a sorted list of numbers, effectively dividing the dataset into two halves.

Normally Distributed

Describes a probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence.