The AD-AS Model Predicts That a Negative AD Shock Will

question 127

Multiple Choice

The AD-AS model predicts that a negative AD shock will cause the price level to ___________ from the initial to a new long-run equilibrium level.But the model is silent about how fast the price level will ___________ from the initial to the new level;the model cannot explain ___________.

• A) decrease;decrease;the inflation rate
• B) decrease;decrease;the price level
• C) increase;increase;the inflation rate
• D) decrease;decrease;stagflation
• E) increase;increase;the price level

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Definitions:

Divided Attention

The cognitive ability to process multiple tasks or stimuli simultaneously.

Reading Magazine

The activity of browsing through and reading periodical publications that contain articles, stories, and images on various subjects.

Vigilance

Sustained attention and watchfulness towards potential dangers or important stimuli.

Chunking

An information processing strategy that involves grouping or organizing material into larger, more manageable units to improve memory retention.