-In the Above Figure, If We Start at AD1 and SRAS1

question 259

Multiple Choice

-In the above figure, if we start at AD1 and SRAS1, and the money supply increases unexpectedly, what causes the economy to get to the long-run equilibrium?

• A) People's expectations will revise after a short-run gain in output, wages will fall, and SRAS will shift leftward.
• B) People's expectations will revise after a short-run gain in output, wages will rise, and SRAS will shift rightward.
• C) People's expectations will revise after a short-run loss in output, wages will fall, and SRAS will shift leftward.
• D) People's expectations will revise after a short-run gain in output, wages will rise, and SRAS will shift leftward.

---

Definitions:

McGurk Effect

A phenomenon that illustrates the interaction between hearing and vision in speech perception, where visual cues can alter what we believe we hear.

Phantom Limb Sensations

Refers to the feeling that an amputated or missing limb is still attached to the body and is moving appropriately with other body parts.

Rubber-Hand Illusion

A psychological experiment that demonstrates how sensory information can influence the perception of one’s body, creating the illusion that a rubber hand is part of the participant’s body.

Tinnitus

A condition characterized by hearing noises (like ringing, buzzing, or humming) in the ears when no external sound is present.