Refer to the Graph $A D _ { 1 }$ Intersects A

question 250

Multiple Choice

Refer to the graph. Assume that the economy is in initial equilibrium where AD $A D _ { 1 }$ intersects A
$A S _ {1 }$ . If
There is an anticipated increase in aggregate demand to AD
$A D _ { 2 }$ , then, according to the rational
Expectations economists, the path for adjustment runs from point

• A) A to B to C.
• B) A to D to C.
• C) A directly to C.
• D) A directly to B.

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Definitions:

Audition

The perception or action of listening.

Vestibular Sense

A sensory system located in the inner ear that contributes to balance and spatial orientation by detecting changes in motion and gravitational forces.

Kinesthesis

The sense that detects body position, movement, and balance, often referred to as the sense of muscular movement.

Cocking Head

The action of tilting or turning the head to one side, often as a gesture of curiosity, listening, or confusion.