Exhibit 16A-3 Macro AD\AS Models in Panel (B)of Exhibit

question 16

Multiple Choice

Exhibit 16A-3 Macro AD\AS Models In Panel (b) of Exhibit 16A-3, the economy is initially in short-run equilibrium at real GDP level Y₁ and price level P₂. Classical theory argues that:

• A)SRAS will shift to leftward and establish full employment at P₃Y_p without government intervention.
• B)higher wages will result in a leftward shift of SRAS.
• C)long-run equilibrium will be established at Y and P₃.
• D)all of these will take place.

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Definitions:

Lie

The act of communicating something that is not true, often with the intent to deceive.

Supply

The total amount of a product or service available for purchase at any given time and price in a market.

Prices

The amount of money expected, required, or given in payment for something.

Consumers

Individuals or groups who purchase goods and services for personal use.