When the AD and SAS Curves Intersect at a Level

question 406

Multiple Choice

When the AD and SAS curves intersect at a level of real GDP which exceeds potential GDP and there is no government policy undertaken, which of the following will occur?

• A) The AD curve shifts rightward because the Fed decreases the money supply.
• B) The SAS curve shifts leftward because the money wage rate rises.
• C) The SAS curve shifts leftward because the money wage rate falls.
• D) The AD curve shifts leftward because the money wage rate rises.

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Definitions:

Basal Metabolic Rate

The pace at which energy is consumed by the body in a resting state to sustain critical operations, including respiration and temperature regulation.

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The physical sensation and physiological need for food.

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An eating disorder characterized by episodes of binge eating followed by inappropriate compensatory behaviors like vomiting or excessive exercise.

Diet Restrictions

Dietary limitations that constrain the intake of specific foods or nutrients for health, religious, or ethical reasons.