Exhibit 20A-2 Macro AD/AS Models

question 16

Multiple Choice

Exhibit 20A-2 Macro AD/AS Models

-As shown in Panel (b) of Exhibit 20A-2,assume the economy adopts a classical nonintervention policy.Which of the following would cause the economy to self-correct?

• A) Competition among firms for workers increases the nominal wage and SRAS shifts rightward.
• B) Long-run equilibrium will be established at Y₁ and P₂.
• C) Long-run equilibrium will be established at Yp and P₃.
• D) Competition among unemployed workers decreases nominal wages and SRAS shifts rightward.

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Definitions:

Industrial Revolution

A period of major industrialization that took place during the late 1700s and early 1800s, radically transforming societies.

Vulnerable

Exposed to the possibility of being attacked or harmed, either physically or emotionally.

Economic Interests

Financial or material stakes affecting individuals, groups, or institutions, driving their actions in the economy.

Avignon Papacy

The period from 1309 to 1376 during which seven successive popes resided in Avignon (then in the Kingdom of Arles, part of the Holy Roman Empire, now in France) rather than in Rome, leading to significant controversy and conflict within the Catholic Church.