Refer to the Diagram and Assume That Prices and Wages

question 177

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 leftward shifts of curves C and D.
• D) recession could be caused by either a leftward shift of curve A or a leftward shift of curve C.

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Definitions:

Stomach Contractions

Involuntary movements of the stomach muscles, which can occur due to various reasons such as hunger, digestion, or distress.

Vagus Nerve

A cranial nerve that extends from the brainstem to the abdomen, influencing heart rate, digestion, and mood regulation.

Stretching

The process of gently elongating muscles and tendons to increase flexibility and reduce the risk of injury.

Stomach Wall

The layers of tissue that form the structure of the stomach, including the mucosa, submucosa, muscularis externa, and serosa.