Figure 26-12 -Refer to Figure 26-12. in the Dynamic AD-AS Model, If

question 205

Multiple Choice

Figure 26-12
-Refer to Figure 26-12. In the dynamic AD-AS model, if the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues no policy, then at point B

• A) firms are producing above capacity.
• B) there is pressure on wages and prices to fall.
• C) the unemployment rate is greater than the natural rate of unemployment.
• D) incomes and profits are falling.

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Definitions:

Neuron

A specific type of cell responsible for conveying nerve signals; also known as a neuron.

Message

An element of communication where information is sent from a sender to a recipient through various means.

Peripheral Nervous System

The segment of the nervous system comprising the nerves and neural clusters found beyond the brain and spinal cord.

Sensory Pathway Neurons

Nerve cells involved in the paths that sensory information travels from the sensory organs to the brain for processing.