Figure 15-3 -As Shown in Figure 15-3,if People Behave According to Rational

question 89

Multiple Choice

Figure 15-3

-As shown in Figure 15-3,if people behave according to rational expectations theory,an increase in the aggregate demand curve from AD₁ to AD₂ will cause the price level to move

• A)directly from 100 to 105 and then remain at 105.
• B)directly from 100 to 110 and then remain at 110.
• C)from 100 to 105 initially and then eventually move back to 100.
• D)from 100 to 105 initially and then eventually move to 110.

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