Figure 35-9

question 514

Multiple Choice

Figure 35-9. The left-hand graph shows a short-run aggregate-supply SRAS) curve and two aggregate-demand AD) curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate."
-Refer to Figure 35-9. The shift of the aggregate-supply curve from AS1 to AS2

• A) results in a more favorable trade-off between inflation and unemployment.
• B) results in a more favorable trade-off between inflation and the growth rate of real GDP.
• C) represents an adverse shock to aggregate supply.
• D) represents a favorable shock to aggregate supply.

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Definitions:

Doomsday Machine

A hypothetical device or concept often associated with nuclear warfare, designed to automatically trigger an apocalyptic retaliation if a certain attack is detected.

Spurious Information

Information that appears to be valid and relevant to a decision or analysis but is actually false and misleading.

Negative Framing Effect

A psychological phenomenon where people make decisions based on the presentation of negative outcomes rather than positive ones, even when both presentations convey the same information.

Smooth Consumption

A concept in economics where individuals prefer to have a stable consumption pattern over time, smoothing out the highs and lows in their spending and consumption.