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

question 4

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 following the positive demand shock is best represented by a(n)

• A) movement up along the Phillips curve.
• B) movement down along the Phillips curve.
• C) upward shift of the Phillips curve.
• D) downward shift of the Phillips curve.

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Definitions:

COBRA

A law that provides former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates.

Substantially Reduced

Significantly decreased in amount, size, extent, or degree.

Employee's Hours

The total time an employee is engaged in work for an employer, typically measured per day or week.

Private Employers

Organizations or individuals that operate and manage businesses which are not owned or controlled by the government, responsible for hiring employees under private employment agreements.