Refer to the Graph

question 264

Multiple Choice

Refer to the graph. Ongoing inflation would occur if the Fed

• A) increased the money supply, causing AD to shift faster than technological progress shifts AS.
• B) increased the money supply, causing AD to shift slower than technological progress shifts AS.
• C) increased the money supply, causing AD to shift as fast as technological progress shifts AS.
• D) did not increase the money supply while technological progress is shifting AS.

---

Definitions:

Highest Initial Price

A pricing strategy where a new product is introduced to the market at a high price before possibly lowering it later based on demand and competition.

Innovative Product

A new or significantly improved product that introduces a novel feature or fulfills a specific need in a new way.

Skimming Pricing

A pricing strategy where a high price is set for a new product to maximize profits from segments willing to pay more, before prices are lowered over time.

Demand-oriented

A pricing strategy where prices are set based on the perceived value to the customer or demand for the product, rather than on the cost of the product or market competition.