Exhibit 17-2 Aggregate Demand and Aggregate Supply Curves as Shown

question 71

Multiple Choice

Exhibit 17-2 Aggregate demand and aggregate supply curves As shown in Exhibit 17-2, if people behave according to adaptive expectations theory, an increase in the aggregate demand curve from AD₁ to AD₂ will cause the price level to move:

• A)directly from 100 to 110 and then remain at 110.
• B)directly from 100 to 105 and then remain at 105.
• C)from 100 to 105 initially and then eventually move back to 100.
• D)from 100 to 105 initially and then eventually move to 110.

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Definitions:

Deductive

A logical process in which a conclusion is based on the concordance of multiple premises that are generally assumed to be true.

Ideological Reasoning

The process of thinking that is guided by a set of beliefs or values belonging to a particular ideology.

Ideological Reasoning

The process of thinking and forming judgements based on a fixed set of beliefs or ideology.

Religion

A set of beliefs concerning the cause, nature, and purpose of the universe, often involving ritual observances and a moral code.