Figure 28-1 -Refer to Figure 28-1. Suppose That the Economy Is Currently

question 205

Multiple Choice

Figure 28-1
-Refer to Figure 28-1. Suppose that the economy is currently at point A on the short-run Phillips curve in the figure above, and the unemployment rate at A is the natural rate. If the economy was to move to point B, which of the following must be true?

• A) The economy is producing a level of GDP equal to potential GDP.
• B) Aggregate demand must have increased.
• C) Equilibrium GDP at point B must be below potential GDP.
• D) The Fed conducted expansionary policy to cause the move.
• E) The Fed purchased treasury bills to cause the move.

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Definitions:

Multiple-Act Criterion

Term for a general behavioural index based on an average or combination of several specific behaviours.

Subjective Norm

The perceived social pressure to perform or not perform a particular behavior, based on the expectations of others.

Specific Measures

Detailed and precise metrics or criteria used for evaluating or assessing particular aspects or phenomena.

Theory of Reasoned Action

A psychological theory that proposes that an individual's intention to engage in a behavior is a primary determinant of whether they will actually do so, influenced by their attitudes and subjective norms.