Exhibit: IS-LM to Aggregate Demand Based on the Graph

question 11

Multiple Choice

Exhibit: IS-LM to Aggregate Demand Based on the graph, which is the correct ordering of the price levels and money supplies?

• A)P₁ > P₂ and M₁ > M₂
• B)P₁ > P₂ and M₁ < M₂
• C)P₁ < P₂ and M₁ > M₂
• D)P₁ < P₂ and M₁ < M₂

---

Definitions:

Acquisition

The process of gaining a new skill, knowledge, behavior, or object through experience, practice, or the act of obtaining.

Conditioned Response

A learned response to a previously neutral stimulus that has become associated with an unconditioned stimulus.

Extinction

In psychology, the diminishing of a conditioned response when the reinforcement is withheld or the stimulus is repeatedly presented without the unconditioned stimulus.

Generalization

The process of applying the knowledge or response acquired from specific stimuli to similar stimuli.