Figure 16-2

question 398

Multiple Choice

Figure 16-2. On the left-hand graph, MS represents the supply of money and MD represents the demand for money; on the right-hand graph, AD represents aggregate demand. The usual quantities are measured along the axes of both graphs.

-Refer to Figure 16-2. A decrease in Y from Y₁ to Y₂ is explained as follows:

• A) The Federal Reserve increases the money supply, causing the money-demand curve to shift from MD₁ to MD₂; this shift of MD causes r to increase from r₁ to r₂; and this increase in r causes Y to decrease from Y₁ to Y₂.
• B) An increase in P from P₁ to P₂ causes the money-demand curve to shift from MD₁ to MD₂; this shift of MD causes r to increase from r₁ to r₂; and this increase in r causes Y to decrease from Y₁ to Y₂.
• C) A decrease in P from P₂ to P₁ causes the money-demand curve to shift from MD₁ to MD₂; this shift of MD causes r to increase from r₁ to r₂; and this increase in r causes Y to decrease from Y₁ to Y₂.
• D) An increase in the price level causes the money-demand curve to shift from MD₂ to MD₁; this shift of MD causes r to decrease from r₂ to r₁; and this decrease in r causes Y to decrease from Y₁ to Y₂.

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Definitions:

Current Distribution Plan

The existing strategy for allocating resources, goods, or services among various recipients or locations.

Individual Performance

Individual performance refers to the level at which an employee accomplishes their assigned duties and tasks, often evaluated in the context of their role within an organization.

Pay Plans

Systems or structures used by organizations to compensate employees, including wages, salaries, bonuses, and incentives.

Stock Plan Types

Various programs offered by companies to employees, allowing them to purchase company shares at favorable terms, such as Employee Stock Ownership Plans (ESOPs) or Stock Option Plans.