Exhibit 14-3 Aggregate Supply and Demand Curves

question 98

Multiple Choice

Exhibit 14-3 Aggregate supply and demand curves

-As the aggregate demand curve shifts from AD₁ to AD₂ in Exhibit 14-3,the economy experiences:

• A)cost-push inflation.
• B)demand-pull inflation.
• C)wage-push inflation.
• D)hyperinflation.

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Definitions:

Reserve Requirement

Central bank regulations regarding the minimum amount of reserves that commercial banks must hold against deposits.

Margin Requirements

The minimum amount of equity that must be maintained in a margin account as mandated by brokers or exchanges.

Discount Rate

The interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility.

Money Market Instruments

Short-term financial instruments that are highly liquid and designed for cash management by investors, including treasury bills, commercial paper, and certificates of deposit.