Suppose That Data for a Particular Economy Over Time Suggest

question 48

Multiple Choice

Suppose that data for a particular economy over time suggest that its aggregate demand curve is both steep and shifts frequently.We might reasonably infer that ________.

• A)the central bank has an activist emphasis on the stability of economic activity
• B)wages and prices are remarkably flexible
• C)policy lags are quite long
• D)all of the above
• E)none of the above

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Definitions:

Adjustment Agreement

A contract or understanding that allows for modifications to be made to the terms of an agreement or deal, adapting to new conditions or information.

COLA

Cost of Living Adjustment, an increase in income to keep up with living expenses, often applied to salaries and benefits to offset inflation.

Misery Index

An economic indicator created by summing the unemployment rate and the inflation rate, intended to measure the average citizen's financial hardship.

Unanticipated Inflation

Inflation that occurs when people do not expect it, leading to negative impacts on savings and purchasing power.