Exhibit 17-3 Aggregate Demand and Aggregate Supply Curves as Shown

question 83

Multiple Choice

Exhibit 17-3 Aggregate demand and aggregate supply curves As shown in Exhibit 17-3, 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)from 100 to 110 initially and then eventually move back to 100.
• B)directly from 100 to 110 and then remain at 110.
• C)directly from 100 to 120 and then remain at 120.
• D)from 100 to 110 initially and then eventually move to 120.