Figure 35-1

question 58

Multiple Choice

Figure 35-1.The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves.On the right-hand diagram,U represents the unemployment rate.
-Refer to Figure 35-1.Suppose points F and G on the right-hand graph represent two possible outcomes for an imaginary economy in the year 2012,and those two points correspond to points B and C,respectively,on the left-hand graph.Also suppose we know that the price index equaled 120 in 2011.Then the numbers 115 and 130 on the vertical axis of the left-hand graph would have to be replaced by

• A)155 and 175,respectively.
• B)138 and 156,respectively.
• C)137.5 and 154.75,respectively.
• D)135 and 150,respectively.

Learn how to calculate the GDP price index and understand its significance.

Comprehend the process of converting nominal GDP to real GDP to analyze economic conditions.

Determine the inflation rate using the consumer price index (CPI) and understand its impact on the economy.

Understand the concept of investment in the context of GDP and how changes in inventories affect GDP calculations.

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Definitions:

Products Liability Action

A legal claim against a manufacturer or seller for producing or selling a defective product causing injury or damage.

MacPherson Case

A landmark legal case that established the principle of duty of care in negligence, making manufacturers liable for harm caused by defective products.

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A person who is reasonably expected to be affected by a defendant's actions, thus entitled to protection under the duty of care in negligence law.

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A legal obligation imposed on individuals or organizations to adhere to a standard of reasonable care while performing any acts that could foreseeably harm others.