Use the Figure Below to Answer the Following Question(s)

question 29

Multiple Choice

Use the figure below to answer the following question(s) . Figure 11-2
Refer to Figure 11-2. When the economy is operating at point a, reliance on the self-correcting mechanism will

• A) result in higher resource prices and a shift to the left in the SRAS curve.
• B) result in lower resource prices and a shift to the right in the SRAS curve.
• C) lead to lower interest rates and a shift to the right in the AD curve.
• D) lead to higher interest rates and a shift to the left in the AD curve.
• E) do both a and d.

---

Definitions:

Perfect Substitutes

Goods or services that can be used in exactly the same way and are interchangeable in consumption without affecting consumer satisfaction.

Straight Lines

Typically refers to the simplest form used in geometry and graphical analysis, representing a direct and continuous path between two points without any curves.

Budget Constraint

The limitation on the consumption choices of an individual or family based on their income and the prices of goods and services.

Indifference Curve

A graph representing combinations of goods or services among which an individual is equally satisfied.