Use the Following to Answer Questions

question 168

Multiple Choice

Use the following to answer questions:
-(Figure: AD-AS Model and the Short-Run Phillips Curve) Refer to Figure: AD-AS Model and the Short-Run Phillips Curve. If the central bank increases the money supply so that aggregate demand shifts from AD₁ to AD₂, then the inflation rate will be:

• A) zero.
• B) 2%.
• C) 4%.
• D) 6%.

---

Definitions:

Independent Variables

Factors within an experiment or model that are intentionally altered to study their impact on outcome variables.

Residuals

The differences between observed values and the values predicted by a regression or other statistical model.

Parabolic Shape

The shape of the graph of a quadratic function, resembling a curve that opens upwards or downwards.