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

question 88

Multiple Choice

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

• A)labor to adjust nominal wages sluggishly.
• B)the aggregate supply curve to remain at SRAS₁.
• C)the price level to eventually rise from 100 to 110.
• D)none of these.

---

Definitions:

Unauthorized Distribution

The act of distributing copyrighted or proprietary material without the permission of the owner.

Gray Market

The trade of goods through distribution channels that are legal but unintended by the original manufacturer.

In-store Shopping App

A mobile application designed to enhance the shopping experience within physical retail locations.

Dynamic Pricing

A pricing strategy where the price of a product or service is flexible, changing in response to market demand, competitor prices, or other external factors.