-In the Above Figure, If Initial Equilibrium Is at Point

question 8

Multiple Choice

-In the above figure, if initial equilibrium is at point A and there is a fully anticipated increase in aggregate demand from AD1 to AD2 due to an anticipated increase in the money supply, then

• A) the economy will move directly from point A to point C without passing through point B.
• B) the economy will move directly from point A to point B, and will remain at point B in the long run.
• C) the price level will shift to P2 in the short run.
• D) the price level will shift to P2 in the long run.

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Definitions:

Preemptive Practices

Strategic actions taken by businesses to anticipate and address potential challenges, obstacles, or market changes before they occur, often to maintain competitive advantage.

Gross Domestic Product

The total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period, serving as a broad measure of a nation's overall economic activity.

Small Businesses

Typically refers to privately owned corporations, partnerships, or sole proprietorships with fewer employees and lower annual revenue than larger businesses.

Visa

An official authorization appended to a passport, permitting entry into and travel within a particular country or region.