Suppose That the Aggregate Demand (ADI)curve in an Economy Is

question 81

Multiple Choice

Suppose that the aggregate demand (ADI) curve in an economy is Y = 20,000 - 20,000
,current inflation (11ec9ae2_bd79_1ce7_a39a_a9c7bc0c6307_TB34225555_11 ) equals 0.04 (4%) ,and potential output (Y*) equals 19,200.If,starting from long-run equilibrium,an inflation shock raises inflation to 6%,in the short run,output will equal ________ and,in the long run,output will equal _________

• A) 18,800;18,800
• B) 18,800;19,200
• C) 19,200;18,800
• D) 19,200;19,200
• E) 19,600;19,200

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Definitions:

Increased Stock Price

Refers to the rise in the market price of a company's shares, which can result from a variety of factors including corporate performance, market trends, and investor sentiment.

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The current team of executives and managers overseeing the operations of a company or organization.

Empire Building

A strategy where a company expands its operations and assets through acquisitions or increased production to increase its market presence, which may not always benefit shareholders.

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Financial derivatives that give the holder the right, but not the obligation, to buy or sell a stock at a predetermined price within a specific time period.