Figure 26-12 -Refer to Figure 26-12. in the Dynamic AD-AS Model, If

question 205

Multiple Choice

Figure 26-12
-Refer to Figure 26-12. In the dynamic AD-AS model, if the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues no policy, then at point B

• A) firms are producing above capacity.
• B) there is pressure on wages and prices to fall.
• C) the unemployment rate is greater than the natural rate of unemployment.
• D) incomes and profits are falling.

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Definitions:

Sincerity

The quality of being free from pretense, deceit, or hypocrisy in one's actions and words.

Genuineness

The quality of being authentic and true to one’s feelings and thoughts in interactions with others.

Sense of Duty

A moral or ethical obligation to act or behave in a certain way, often fueled by personal principles or societal expectations.

Intimacy Versus Isolation

A stage of psychosocial development proposed by Erik Erikson where the challenge is to develop close, committed relationships with others.