Figure 16-5 -Refer to Figure 16-5.In the Dynamic Model of AD-AS in of AD-AS

question 224

Multiple Choice

Figure 16-5
-Refer to Figure 16-5.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,and no fiscal or monetary policy is pursued,then at point B

• A)the unemployment rate is very low.
• B)firms are operating below capacity.
• C)the economy is above full employment.
• D)income and profits are definitely rising.
• E)there is pressure on wages and prices to rise.

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