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:

Oedipal Complex

A concept in psychoanalytic theory referring to a child's unconscious sexual desire for the opposite-sex parent and jealousy towards the same-sex parent.

Male Child

A young male human, often referred to as a boy.

Desires

Strong feelings of wanting or wishing for something to happen.

Behaviourism

A theory in psychology that focuses on observable behaviors rather than internal processes such as thoughts and feelings, emphasizing the effects of reinforcement on behavior.