The Graph Shown Displays Various Economic Outcomes

question 86

Multiple Choice

The graph shown displays various economic outcomes. If the economy is currently at equilibrium B, and the government does nothing, then eventually:

• A) SRAS will shift to the right, and the economy will have Y ₃ output with lower prices.
• B) SRAS will shift to the left, and the economy will experience stagflation.
• C) LRAS will shift to the left until equilibrium is reached.
• D) AD will shift to the right, restoring long-run equilibrium.

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Definitions:

Expectations

Refers to the anticipations or beliefs regarding future events or outcomes, can significantly influence attitudes and decisions.

Rats

Commonly used as model organisms in psychological and neurological research due to their similarity to humans in physiology, behavior, and genetics.

Nativism

A philosophical doctrine emphasizing the role of innate factors in the acquisition of knowledge.

Empiricism

A philosophical doctrine emphasizing the role of experience in the acquisition of knowledge.