Figure 12.4 Scenario: the Above Figures Represent the Economy of Mondolvia, Where

question 41

Multiple Choice

Figure 12.4

Scenario: The above figures represent the economy of Mondolvia, where points A, B, C, and D in the first figure reflect the corresponding points in the second figure. The economy of Mondolvia is initially at equilibrium with real GDP equal to potential GDP. In April 2012, Mondolvia reached the peak of a rapid housing bubble that dramatically increased consumer wealth. The central bank of Mondolvia recognized this housing bubble peak existed in June, 2012 and implemented corrective policy in August 2012. The corrective policy actually changed output in the economy 12 months after it was implemented. In the meantime, the housing bubble burst in December 2012, returning the economy back to its initial, pre-bubble equilibrium level.
-Refer to Figure 12.4.Since the housing bubble burst and the economy returned to its initial,pre-bubble level before the corrective policy changed output,the impact of the change in policy is best represented as a movement from

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

---

Definitions:

Spoiled Food

Food that has gone bad due to bacteria, mold, or yeast growth, making it unsafe to eat and potentially causing illness.

Saliva

A watery secretion in the mouth from the salivary glands, important for digestion and oral hygiene.

Swallow Efficiently

The ability to manage and control the swallowing process effectively, minimizing effort and risk of aspiration.

Life Expectancy

The average period that an individual is expected to live, based on statistical analysis, which can vary by geographical location, era, and other factors.