Which of the Following Would Be the Theoretical Outcome of Expansionary

question 167

Multiple Choice

Which of the following would be the theoretical outcome of expansionary fiscal policy in the following aggregate demand-aggregate supply model?

• A) The aggregate demand A
• D) curve would shift from AD₁ to AD₂.
• B) The short-run aggregate supply SRA
• S) curve would shift from SRAS₂ to SRAS₁.
• C) The short-run aggregate supply SRA
• S) curve would shift from SRAS₁ to SRAS₂.
• D) The aggregate demand A
• D) curve would shift from AD₁ to AD₂ at the same time that the SRAS curve would shift from SRAS₁ to SRAS₂.
• E) The aggregate demand A
• D) curve would shift from AD₂ to AD₁.

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Definitions:

Perfect Rationality

The assumption or condition under which individuals make decisions that are entirely logical and optimize their self-interest.

Turnover

The rate at which employees leave a company and are replaced by new employees, affecting the company's performance and morale.

Decision-Making Error

Mistakes or flaws in the process of choosing between alternatives that can lead to suboptimal or harmful outcomes.

Salaries

Regular payments made to employees for their labor, typically expressed as an annual sum and paid in monthly or biweekly intervals.