Figure 27-4 -In the New Classical Model in Figure 27-4,the Long-Run Effects

question 78

Multiple Choice

Figure 27-4
-In the new classical model in Figure 27-4,the long-run effects of an anticipated increase in aggregate demand that is less than expected ________.

• A) increases output from Yn to Y2, and the inflation rate from P1 to P2
• B) decreases output from Yn to Y5, and increases the inflation rate from P1 to P5
• C) does not change output and increases the inflation rate from P1 to P3
• D) does not affect the levels of real output or inflation

---

Definitions:

Carrying Amount

The book value of an asset or liability, determined according to the relevant accounting standards.

Unamortized Discount

The portion of a bond's original issue discount (OID) that has not yet been amortized or expensed over the term of the bond.

Unamortized Premium

An unamortized premium refers to the remaining amount of a premium above the face value of a bond that has not yet been expensed over the bond's life.

Market Rate

The prevailing interest rate available in the marketplace for securities or loans at any given time.