Refer to the Accompanying Figure

question 97

Multiple Choice

Refer to the accompanying figure. Starting from long-run equilibrium at point C, an adverse inflation shock that increases inflation from π to π¹ will lead to a short-run equilibrium at point ________ creating ________ gap.

• A)A; an expansionary
• B)A; a recessionary
• C)B; a recessionary
• D)B; an expansionary

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Definitions:

Physical Brain

The tangible, biological organ contained within the skull, responsible for neurological functions and cognitive processes.

Mind

The mind encompasses the array of cognitive faculties by which consciousness, perception, thinking, judgement, and memory are experienced and processed.

Determinism

The idea in philosophy that every event and moral decision is fully caused by preceding factors.

Predict

To declare or indicate in advance; to forecast the occurrence of something.