Suppose That the Money Prices of Raw Materials Increase So

question 344

Multiple Choice

Suppose that the money prices of raw materials increase so that the short-run aggregate supply decreases. If the Federal Reserve does not respond, the higher money price of raw materials will
I. repeatedly shift the aggregate demand curve rightward and raise the price level.
II. shift the aggregate demand curve rightward and the aggregate supply curve leftward, raising prices.
III. result initially in lower employment and a higher price level.

• A) I only
• B) both I and II
• C) both II and III
• D) III only

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Definitions:

Roughage

Fibrous parts of food, typically indigestible, that help in the movement and processing of waste through the digestive system.

Fiber

A dietary component found in fruits, vegetables, and whole grains, important for digestive health and preventing diseases.

Casual Contact

Interactions that occur in a social setting that are informal and not planned.

Saturated Fats

Fats containing a high proportion of fatty acid molecules without double bonds, considered less healthy in large amounts.