Refer to the Graph Above

question 97

Multiple Choice

Refer to the graph above. Suppose that the economy is at an initial equilibrium where the AD₁ and AS₁ curves intersect. If cost-push inflation occurs and the government subsequently implements expansionary policy, then the effect of such policy is to shift:

• A) AD₁ to AD₂, which increases the price level from P₁ to P₂, and increases real domestic output from Q₃ to Q₂
• B) AS₁ to AS₂, which increases the price level from P₁ to P₂, and decreases real output from Q₁ to Q₂
• C) AD₁ to AD₂, which increases the price level from P₂ to P₃, and increases real output from Q₂ to Q₁
• D) AS₂ to AS₃ which increases the price level from P₂ to P₃, and decreases real output from Q₂ to Q₃

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Definitions:

Independence

The state or condition of being free from dependence, influence, or control by others, whether it relates to countries, organizations, or individuals.

Isolation

The process of keeping a person, group, substance, or environment separate from others, often for the purpose of preventing the spread of contaminants or diseases.

Information Silos

Isolated islands of data or information managed by one department or unit within an organization that are not easily or fully accessible to other parts of the organization, leading to inefficiency.

File Management Environment

Refers to the processes and software tools that oversee, organize, and control files in an operating system or cloud storage.