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Figure: Classical Model of the Price Level Use the following to answer questions : Figure: Classical Model of the Price Level   -(Figure: Classical Model of the Price Level)  Look at the figure Classical Model of the Price Level. If the central bank increases the money supply such that aggregate demand shifts from AD<sub>1</sub> to AD<sub>2</sub>, according to this classical model, the price level will: A) not change. B) increase from P<sub>1</sub> to P<sub>2</sub>. C) increase from P<sub>1</sub> to P<sub>3</sub>. D) decrease from P<sub>1</sub> to P<sub>2</sub>.
-(Figure: Classical Model of the Price Level) Look at the figure Classical Model of the Price Level. If the central bank increases the money supply such that aggregate demand shifts from AD1 to AD2, according to this classical model, the price level will:


Definitions:

Oral Character

A personality type in psychoanalytic theory associated with issues in the oral stage of development, such as dependency.

Phallic Stage

In psychoanalytic theory, the stage of psychosexual development from about 4 to 7 years of age in which the physical focus of the libido is the penis (for boys) and its absence (for girls).

Latency Period

A stage in psychosexual development, proposed by Freud, occurring from about age six to puberty, characterized by a decrease in sexual interest and activity.

Psychosexual Stages

Freud's theory on the stages of psychological development in childhood, each associated with a different erogenous zone.

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