Refer to the Following Figure When Answering

question 70

Multiple Choice

Refer to the following figure when answering
Figure 13.4: AS/AD Model
-Use the aggregate supply/aggregate demand model in Figure 13.4 to answer the following scenario. In the 1990s, Japan experienced a prolonged sluggish economy. If the Bank of Japan targeted inflation, it would have responded to this situation by ________, pushing the economy from point ________ to point ________; eventually the economy would have returned to the steady state at point ________.

• A) raising the inflation target rate; a; b; c
• B) lowering the inflation target rate; a; b; c
• C) raising the inflation target rate; a; d; c
• D) lowering the inflation target rate; c; d; a
• E) Not enough information is given.

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Definitions:

Gross Profit

The amount remaining from sales revenue after subtracting the cost of products sold, prior to removing expenses for overhead, wages, taxes, and interest.

Operating Expenses

Costs incurred during the normal operations of a business, such as sales and marketing, administration, and cost of goods sold.

Gross Margin

The difference between sales and the cost of goods sold, which measures the profitability of the products sold before other expenses are deducted.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenues.