AD - AS Shocks

question 71

Multiple Choice

AD - AS Shocks
-On the graph above,suppose point G is on the short-run aggregate supply curve π = 2.5 + 2 × (Y - 22) and aggregate demand curve Y = 29.25 - 0.5π.If output at point G is 25,and inflation expectations are adaptive,then the inflation rate next period will be ________.

• A)11.5
• B)14.5
• C)8.5
• D)2.5
• E)none of the above

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Definitions:

Recognition

The cognitive process of identifying information as being familiar, such as objects, situations, or people.

Savings

A concept in psychology referring to the amount of time or effort saved in relearning material compared to the initial learning.

Implicit Memories

Implicit memories are memories that influence our behavior and knowledge without conscious awareness.

Explicit Memories

Memories that can be consciously recalled, such as facts and events.