Refer to the Figure Below

question 1

Multiple Choice

Refer to the figure below.Suppose the economy is initially in equilibrium with output Y₂ and inflation rate of ₃.An increase in military spending will:

• A)shift AD from AD₂ to AD₁.
• B)shift AD from AD₁ to AD₂.
• C)shift AS from AS₂ to AS₁.
• D)shift AS from AS₁ to AS₂.

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Definitions:

Federal Government

The national government of a federation, which holds the authority over matters that affect the entire country, such as defense, foreign policy, and monetary policy.

Personally Liable

Responsibility on an individual level for debts or legal obligations, rather than through an intermediary like a corporation or LLC.

Partnership

An authorized business setup where multiple individuals participate in management and equally divide profits.

Profits

Financial gains obtained after deducting the costs, expenses, and taxes associated with doing business or an economic activity.