When the AD and SAS Curves Intersect at a Level

question 406

Multiple Choice

When the AD and SAS curves intersect at a level of real GDP which exceeds potential GDP and there is no government policy undertaken, which of the following will occur?

• A) The AD curve shifts rightward because the Fed decreases the money supply.
• B) The SAS curve shifts leftward because the money wage rate rises.
• C) The SAS curve shifts leftward because the money wage rate falls.
• D) The AD curve shifts leftward because the money wage rate rises.

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