If Strong Aggregate Demand Is Pushing the Economy Beyond Potential

question 229

Multiple Choice

If strong aggregate demand is pushing the economy beyond potential real GDP,which of the following must be true?

• A)The economy is at an equilibrium that is on the long-run aggregate supply curve.
• B)The economy is at an equilibrium that is on the long-run Phillips curve.
• C)The economy is at an equilibrium that is not on the long-run Phillips curve.
• D)Expansionary monetary policies will push the economy back to the long-run Phillips curve.

---

Definitions:

Sympathetic Nerve

Part of the autonomic nervous system that prepares the body for fight or flight response, regulating heart rate, blood pressure, and energy mobilization.

Glossopharyngeal Nerve

The ninth cranial nerve, responsible for taste and sensory functions in the tongue and throat, as well as stimulating salivary gland secretion.

Carotid Baroreceptors

Pressure-sensitive sensory neurons located in the carotid arteries that help regulate blood pressure by detecting changes in blood pressure and sending signals to the brain.

Sympathetic Nerve

A component of the autonomic nervous system that readies the body for activities associated with stress.