The Figure Below Shows Equilibrium in an Aggregate Demand-Aggregate Supply

question 2

Multiple Choice

The figure below shows equilibrium in an aggregate demand-aggregate supply model. In this figure, the shift from AS to AS' is likely to occur when:

• A) the actual price level is higher than expected.
• B) the actual price level is lower than expected.
• C) the unemployment rate is lower than the natural rate.
• D) the actual output is more than the potential output.
• E) the aggregate demand curve intersects the short-run aggregate supply curve at the potential output.

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Definitions:

Liability

The state of being legally responsible for something, especially in terms of debts or damages.

Alteration

An unauthorized change to an instrument that modifies the obligation of a party to the instrument.

Promissory Note

A written promise to pay a specified sum of money to a certain individual or entity at a specified time or on demand.

Fictitious-Payee Rule

A principle in commercial law that a bank is not liable for fraudulent endorsement payments if the drawer intended the payee to be fictitious.