Use the Following to Answer Questions

question 261

Multiple Choice

Use the following to answer questions:
Figure: An Increase in Aggregate Demand
-(Figure: An Increase in Aggregate Demand) Refer to Figure: An Increase in Aggregate Demand. Assume that the economy is initially in long-run equilibrium at Y_P and P₁. Now suppose that there is an increase in the level of government purchases at each price level. This will:

• A) shift the aggregate demand curve from AD₂ to AD₁.
• B) shift the aggregate demand curve from AD₁ to AD₂.
• C) lead to increased output and a decrease in the price level.
• D) lead to decreased output and a decreased price level.

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Definitions:

Mnemonics

Memory aids or techniques that use associations, patterns, or other strategies to enhance the recall of information.

Long-Term Memory

The phase or type of memory responsible for the storage of information over extended periods, potentially as long as a lifetime.

Maintenance Rehearsal

The process of repeatedly verbalizing or thinking about a piece of information to keep it in short-term memory.

Implicit Memory

A type of memory in which previous experiences aid in the performance of a task without conscious awareness of these previous experiences.