Refer to the Diagram and Assume That Prices and Wages

question 228

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 a rightward shift of curve A, followed by a leftward shift of curve C.
• C) recession would involve a leftward shift of curve A, followed by a rightward 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:

Hyperventilating

Rapid or deep breathing that exceeds the body's need for oxygen, often due to anxiety or panic.

Tingling

A sensation of prickling, tingling, or numbness in a body part, often indicating nerve damage or disease.

Acid-base Imbalances

A disruption in the equilibrium of the body's acid and base levels, which can significantly affect bodily functions.

Insulin

A hormone produced by the pancreas that regulates blood glucose levels by facilitating the uptake of glucose into cells.