Refer to the Diagram and Assume That Prices and Wages

question 171

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 leftward 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 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:

Emergent Strategy

A strategy that unfolds in response to unexpected opportunities and challenges, rather than being planned from the start.

Environmental Changes

Alterations in the surrounding conditions including climate change, pollution, and natural habitat destruction that impact ecosystems and human societies.

Porter's Model

A framework created by Michael Porter that analyzes an industry's competitiveness and strategic business position through five forces: competition in the industry, potential of new entrants, power of suppliers, power of customers, and the threat of substitute products.

Business Strategy

A long-term plan of action designed to achieve a particular goal or set of goals or objectives within a company.