Refer to the Diagram $\mathrm { AS } _ { 2 } \text { to } \mathrm { AS } _ { 1 }$

question 36

Multiple Choice

Refer to the diagram. The initial aggregate demand curve is AD₁, and the initial aggregate supply curve is AS₁. Assuming no change in aggregate demand, the long-run response to a recession caused by cost-push inflation is best depicted as a

• A) move from a to d along the long-run aggregate supply curve.
• B) rightward shift of the aggregate supply curve from A \(\mathrm { AS } _ { 2 } \text { to } \mathrm { AS } _ { 1 }\)
• C) move from a to c to d.
• D) leftward shift of the aggregate supply curve from A \(\mathrm { AS } _ { 1 } \text { to } \mathrm { AS } _ { 2 }\)

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Definitions:

Selection Differences

Disparities between groups in an experimental study that can affect the outcome, often resulting from non-random assignment.

Testing Effects

The impact that pre-testing may have on the subjects' performance in subsequent assessments.

Cross-sectional

A research design that collects data from a population, or a representative subset, at one specific point in time.

Reasoning Ability

The capacity to think logically, understand and apply principles, and solve problems, often measured through cognitive tests.