-An Economy Is at Potential GDP and the Price Level

question 128

Multiple Choice

-An economy is at potential GDP and the price level is 100 in the figure above. If aggregate demand unexpectedly increases so that the aggregate demand curve shifts to AD?, the inflation rate is ________.

• A) 0 percent a year
• B) 10 percent a year
• C) 20 percent a year
• D) More than 20 percent a year

---

Definitions:

Relative Frequency

The proportion of occurrences of a specific event compared to the overall amount of attempts or observations.

Nonoverlapping Classes

Categories or groups in a classification system where each member of the population belongs to one and only one group, ensuring distinct boundaries.

Cumulative Frequency

The sum of a series of frequencies, calculated by adding each frequency from a frequency distribution table to the sum of its predecessors.

Upper Limit

The maximum value in a given set or the highest value that a variable can assume.