Figure 28-1 -Refer to Figure 28-1. Suppose That the Economy Is Currently

question 205

Multiple Choice

Figure 28-1
-Refer to Figure 28-1. Suppose that the economy is currently at point A on the short-run Phillips curve in the figure above, and the unemployment rate at A is the natural rate. If the economy was to move to point B, which of the following must be true?

• A) The economy is producing a level of GDP equal to potential GDP.
• B) Aggregate demand must have increased.
• C) Equilibrium GDP at point B must be below potential GDP.
• D) The Fed conducted expansionary policy to cause the move.
• E) The Fed purchased treasury bills to cause the move.

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Definitions:

Food and Water

Essential nutrients required by humans and animals for survival, including solid sustenance and hydration.

Privilege to Detain

A legal right or authorization given to certain authorities to arrest or hold individuals under specific circumstances.

Harmful Contact

Physical interaction that results in injury or damage to another person, considered to be a form of assault.

Intent to Confine

The deliberate intention to restrict an individual's freedom of movement unlawfully.