Exhibit 20A-2 Macro AD/AS Models

question 8

Multiple Choice

Exhibit 20A-2 Macro AD/AS Models

-In Panel (b) of Exhibit 20A-2,the economy is initially in short-run equilibrium at real GDP level Y₁ and price level P₂.Classical theory argues that:

• A) SRAS will shift to leftward and establish full employment at P₃Yp without government intervention.
• B) higher wages will result in a leftward shift of SRAS.
• C) long-run equilibrium will be established at Yp and P₃.
• D) all of the above will take place.

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Definitions:

Cortisol

A steroid hormone produced by the adrenal glands, involved in the body's stress response as well as metabolism and immune function.

Growth Hormone

A substance produced by the pituitary gland which promotes growth, the creation of new cells, and the renewal of cells in humans and animals.

Thyroid Hormone

Thyroid hormone includes several hormones produced by the thyroid gland, primarily thyroxine (T4) and triiodothyronine (T3), which regulate metabolism, energy generation, and developmental growth.

TSH

Thyroid Stimulating Hormone, a pituitary gland hormone that stimulates the thyroid gland to produce thyroid hormones, which regulate metabolism.