Figure 26-6 -Refer to Figure 26-6.In the Dynamic Model of AD-AS in Model

question 10

Multiple Choice

Figure 26-6

-Refer to Figure 26-6.In the dynamic model of AD-AS in the figure above,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) there is pressure on wages and prices to rise.
• B) the unemployment rate is very, very low.
• C) firms are operating above their normal capacity.
• D) the economy is below full employment.
• E) incomes and profits are rising.

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