Figure 15-3 as Shown in Figure 15-3, If People

question 9

Multiple Choice

Figure 15-3 As shown in Figure 15-3, if people behave according to adaptive expectations theory, an increase in the aggregate demand curve from AD₁ to AD₂ will cause the economy to move

• A) directly from E₁ to E₃ and then remain at E₃.
• B) directly from E₁ to E₂ and then remain at E₂.
• C) from E₁ to E₂ initially and then eventually move back to E₁.
• D) from E₁ to E₂ initially and then eventually move to E₃.

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