Exhibit 14A-1  Aggregate Demand and Supply Model Beginning from Short-Run

question 24

Multiple Choice

Exhibit 14A-1  Aggregate demand and supply model Beginning from short-run equilibrium at point E₂ in Exhibit 14A-1, the economy's movement to a new position of long-run equilibrium would best be described as:

• A) a movement along the AD₂ curve with a shift in the SRAS₁ curve.
• B) a movement along the SRAS₂ curve with a shift in the AD₂ curve.
• C) a shift in the LRAS curve to an intersection at E₁.
• D) no shift of any kind.

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Definitions:

Incentives

Rewards or benefits offered to encourage a specific action or behavior.

Group Norms

Unwritten rules and expectations about how group members should behave, which influence the behavior of individuals within the group.

Resistance To Change

The act of opposing or struggling against modifications or transformations within an organization or in personal behavior.

Group Inertia

The tendency of a group to maintain its current state or resist changes in direction or performance.