In the Graphs Below, Q_P Refers to the Economy's Potential

question 89

Multiple Choice

In the graphs below, Q_P refers to the economy's potential output level. Refer to the graphs above. In Graph A, an increase in the price level from P₁ to P₂ will cause:

• A) The nation's unemployment rate to be greater than the natural rate of unemployment
• B) The nation's unemployment rate to be less than the natural rate of unemployment
• C) Product prices to decrease
• D) Profits to decrease

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Definitions:

Vasoconstriction

The narrowing of the blood vessels resulting from contraction of the muscular wall of the vessels, which increases blood pressure.

Cardiovascular

Pertaining to the heart and blood vessels, relating to the system that circulates blood throughout the body.

Nervous System

An extensive network of neurons and supporting tissues that processes information in the body through electrical and chemical signals.

Coagulation

The action or process of a liquid, especially blood, changing to a solid or semi-solid state.