Beginning at Long-Run Equilibrium in the Dynamic Model of Aggregate

question 49

Multiple Choice

Beginning at long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, if the central bank permanently reduces its inflation target, then in the initial period the DAS curve _____ and the DAD curve _____.

• A) shifts upward; shifts rightward
• B) does not shift; shifts leftward
• C) does not shift; does not shift
• D) shifts downward; shifts leftward

---

Definitions:

Set Point

A theory suggesting that the body regulates its weight and energy balance around a biologically predetermined point.

Weight Change

Refers to the fluctuation of a person's body weight over time, which can result from factors such as diet, exercise, and health conditions.

Set Point For Body Weight

A theory suggesting that the body regulates its weight and body fat level with internal controls, aiming to maintain a particular weight.

Natural Point Of Stability

An equilibrium state to which a system naturally tends to return after being disturbed.