Figure 27-2 -Refer to Figure 27-2.In the Dynamic Model of AD-AS in Model

question 78

Multiple Choice

Figure 27-2

-Refer to Figure 27-2.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,and no fiscal or monetary policy is pursued,then at point B

• A) the unemployment rate is very low.
• B) firms are operating below capacity.
• C) the economy is above full employment.
• D) income and profits are rising.
• E) there is pressure on wages and prices to rise.

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Definitions:

Exchange Rate

The value of one currency for the purpose of conversion to another, affecting how much of one currency can be exchanged for another.

Real Interest Rates

The yield that an investor, saver, or lender anticipates or earns, adjusted for the effects of inflation.

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Debt securities issued by the United Kingdom government, serving as a way for the government to borrow money from investors.

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Individuals who are legally recognized as members of the United States, with specific rights, privileges, and obligations.