Figure 15-11 -Refer to Figure 15-11.In the Dynamic Model of AD-AS in of AD-AS

question 12

Multiple Choice

Figure 15-11
-Refer to Figure 15-11.In the dynamic model of AD-AS in the figure above,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 policy.This will result in

• A)unemployment rates higher than what would occur if no policy had been pursued.
• B)inflation higher than what would occur if no policy had been pursued.
• C)real GDP lower than what would occur if no policy had been pursued.
• D)short-term interest rates higher than what would occur if no policy had been pursued.

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Definitions:

Premises

Statements or propositions that are presented as the basis for a conclusion, forming the groundwork of an argument or logical reasoning.

Independent

Not influenced by or dependent on something else; having the freedom to act, operate, or decide without being controlled by others.

Dependent

In statistical terms, a variable whose value is influenced or determined by another variable; in general, relying on someone or something else for support or existence.

Deductive Step

A logical step in which a conclusion follows necessarily from the given premises, ensuring that if the premises are true, the conclusion must also be true.