Figure 16-6 -Refer to Figure 16-6.In the Dynamic Model of AD-AS in of AD-AS

question 251

Multiple Choice

Figure 16-6
-Refer to Figure 16-6.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,and no fiscal or monetary policy is pursued,then at point B

• A)the unemployment rate is very low.
• B)firms are operating at below capacity.
• C)the economy is below full employment.
• D)income and profits are falling.
• E)there is pressure on wages and prices to fall.

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Definitions:

Exposure

The state of being subject to the possible effects of something, often used in the contexts of risks, health, or photography.

Return

Return refers to the profit or loss derived from an investment over a specified period, typically expressed as a percentage of the investment's initial cost.

Expected Payoff

The predicted value of a decision, investment, or gamble, factoring in all possible outcomes and their probabilities.

Probability

A measure of the likelihood that an event will occur, quantified as a number between 0 and 1.