-An Economy Is at Potential GDP and the Price Level

question 128

Multiple Choice

-An economy is at potential GDP and the price level is 100 in the figure above. If aggregate demand unexpectedly increases so that the aggregate demand curve shifts to AD?, the inflation rate is ________.

• A) 0 percent a year
• B) 10 percent a year
• C) 20 percent a year
• D) More than 20 percent a year

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Definitions:

Ownership Interest

A legal or equitable claim in property, entitling the holder to a share of the asset's value, benefits, or profits.

Management Rights

The legal and practical powers that allow managers and executives to direct operations and make decisions within an organization.

Hourly Wage

Compensation paid to an employee based on the number of hours worked.

Secret Profit

Gains obtained by an individual, often an agent or fiduciary, without the knowledge or consent of the principal or beneficiary they represent.