Use the Aggregate Supply/aggregate Demand Model in Figure 13

question 49

Multiple Choice

Use the aggregate supply/aggregate demand model in Figure 13.4 to answer the following scenario. In the 1990s, Japan experienced a prolonged sluggish economy. If the Bank of Japan targeted inflation, it would have responded to this situation by ________ the inflation target rate, pushing the economy from point ________ to point ________; eventually the economy would have returned to the steady state at point ________.

• A) raising; a; b; c
• B) lowering; a; b; c
• C) raising; a; d; c
• D) lowering; c; d; a
• E) Not enough information is given.

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Definitions:

Industry Concentration

Industry concentration is the degree to which a small number of firms dominate the total output, sales, or employment in an industry.

Bell-Shaped-Curve

A graphical representation of a normal distribution in statistics, where the apex represents the highest point or the mean, and the curve tapers equally on both sides.

Market Structures

The classification of markets based on the competition level and the nature of product differentiation among firms within an industry.

Retained Earnings

are the portion of a company's profits that are held back and not distributed to shareholders as dividends, often reinvested in the business.