-In the Above Figure, If We Start at AD₁ and SRAS₁

question 170

Multiple Choice

-In the above figure, if we start at AD₁ and SRAS₁, and the money supply increases unexpectedly, what causes the economy to get to the long-run equilibrium?

• A)People's expectations will revise after a short-run gain in output, wages will fall, and SRAS will shift leftward.
• B)People's expectations will revise after a short-run gain in output, wages will rise, and SRAS will shift rightward.
• C)People's expectations will revise after a short-run loss in output, wages will fall, and SRAS will shift leftward.
• D)People's expectations will revise after a short-run gain in output, wages will rise, and SRAS will shift leftward.

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Definitions:

Self-Fulfilling Prophecy

A belief or expectation that influences behavior in a way that causes the belief to become true.

Stereotypes

Oversimplified generalized beliefs about a group of people that often do not accurately reflect reality, influencing attitudes and behaviors towards members of that group.

Beautiful Is Good

A social psychological phenomenon where physical attractiveness leads people to attribute other positive traits such as intelligence and kindness to the person.

Stereotype

A fixed, overgeneralized belief about a particular group or class of people.