When the AD and SAS Curves Intersect at a Level

question 380

Multiple Choice

When the AD and SAS curves intersect at a level of real GDP which exceeds potential GDP and there is no government policy undertaken,which of the following will occur?

• A) The AD curve shifts rightward because the Fed decreases the money supply.
• B) The SAS curve shifts leftward because the money wage rate rises.
• C) The AS curve shifts leftward because the money wage rate falls.
• D) The AD curve shifts leftward because the money wage rate rises.

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Definitions:

Catatonia

A psychiatric condition marked by a variety of motor behaviors, from physical rigidity to hyperactivity and immobility.

Acrophobia

An intense fear of heights, often leading to significant anxiety when in high places.

Major Depressive Disorder

A serious to severe depressive disorder in which the person may show loss of appetite, psychomotor retardation, and impaired reality testing.

Delusional Disorder

A psychiatric condition characterized by persistent delusions, which are false beliefs that conflict with reality, in the absence of other major psychiatric symptoms.