Refer to the Diagram and Assume That Prices and Wages

question 213

Multiple Choice

Refer to the diagram and assume that prices and wages are flexible both upward and downward in the economy. In the extended AD-AS model,

• A) demand-pull inflation would involve a rightward shift of curve A, followed by a rightward shift of curve C.
• B) cost-push inflation would involve first a leftward shift of curve C, then a rightward shift of curve C.
• C) recession would involve a leftward shift of curve A, followed by a leftward shift of curve C.
• D) recession would involve a rightward shift of curve D, followed by leftward shifts of curves A and C.

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Definitions:

Conscience

An inner feeling or voice viewed as acting as a guide to the rightness or wrongness of one's behavior.

Reason

The mental capacity to logically identify, analyze, and integrate information to form conclusions or judgments.

Cultural Relativist

Someone who believes that moral and ethical systems, which vary from culture to culture, are all equally valid and no one system is really "better" than another.

Morally Required

Actions or behaviors that are considered necessary according to ethical or moral principles.