In the Dynamic Model of Aggregate Demand and Aggregate Supply $\theta$

question 8

Multiple Choice

In the dynamic model of aggregate demand and aggregate supply, if the central bank chooses a large value of $\theta$ _$\pi$ , the responsiveness of nominal interest rates to inflation, and a small value of $\theta$ _Y, the responsiveness of nominal interest rates to output, then the DAD curve will be relatively _____, and supply shocks will have relatively ____ impacts on inflation than output.

• A) flat; larger
• B) flat; smaller
• C) steep; larger
• D) steep; smaller

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Definitions:

Side Chain

A group of atoms attached to the main part of a molecule and having a composition and structure independent of the molecule's primary structure.

Amino Acid

Organic compounds containing an amine (-NH2) and a carboxyl (-COOH) functional group, along with a side chain; they are the building blocks of proteins.

Complete Proteins

Proteins that contain all nine essential amino acids necessary for the dietary needs of humans.

Side Chain

The part of an organic molecule that is attached to the main chain (or backbone) of the molecule, which can influence the molecule's properties and reactivity.