Use the Figure Below to Answer the Following Question

question 76

Multiple Choice

Use the figure below to answer the following question.
Figure 15-5

-Refer to Figure 15-5.If the economy were currently operating at point A in the exhibit and expansionary policy were enacted that would shift AD₁ to AD₂,

• A)if people have adaptive expectations,the economy would move to point B in the short run.
• B)if people have rational expectations,the economy would move to point C in the short run.
• C)in the long run,the economy would move to point C regardless of how expectations are formed.
• D)all of the above are true.

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by an independent organization for global use.

Operating Activities

Day-to-day actions that are involved in running a business, such as sales, purchasing, and paying expenses, that affect the company's cash flow.

Financing Activities

Transactions involving raising capital and repaying investors, including issuing equity, borrowing funds, and repaying debt, as part of the company's cash flow activities.

Dividends Paid

The portion of a company's earnings distributed to shareholders.