Figure 11.2 -Refer to Figure 11.2..Assume the Economy Is in Equilibrium at Is

question 22

Multiple Choice

Figure 11.2

-Refer to Figure 11.2..Assume the economy is in equilibrium at Ȳ₁,where real GDP equals potential GDP.The economy experiences a positive demand shock,and the Bank of Canada responds by increasing real interest rates to bring real GDP and inflation back to their original levels.Other things equal,the Bank of Canada's response to the positive demand shock is best represented by a movement from

• A) point B to point D.
• B) point C to point D.
• C) point B to point A.
• D) point C to point A.

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Definitions:

Disjunction

A logical operator that yields true if either or both of the operands are true.

Probability

The measure of the likelihood that an event will occur, often represented as a number between 0 and 1.

Negation

The logical operation that inverts the truth value of a proposition or statement.

Probability

The degree to which something is probable; the extent to which an event is likely to happen.