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1511 10 NH FIGURE 14-2 13/01 30 Ye AST ASO AD AD ADD Heal CDP Time left 0:16:15 Refer to Figure 14-2. Suppose an inflationary gap has opened and the economy is at E₁ Which of the following statements best describes the movement of the economy from ₁ to Select one: A The inflationary gap puts upward pressure on factor prices and AS shifts upward. Simultaneously, the Bank of Canada validates the demand shock, thus shifting the AD curve further to the right. B. The inflationary gap puts upward pressure on factor prices and AS shifts upward. Simultaneously, the Bank of Canada implements a contractionary monetary policy shifting the AD curve to the left. C. The inflationary gap causes an increase in the expectations of the future inflation. As a result, the AS curve shifts upward and the AD curve shifts to the right D. The inflationary gap generates excess demand for labour, which causes the AD curve to shift to the right. The adjustment process then shifts the AS curve upward. The economy's adjustment process causes the economy to move from 5 to 6₂

1511 10 NH FIGURE 14-2 13/01 30 Ye AST ASO AD AD ADD Heal CDP Time left 0:16:15 Refer to Figure 14-2. Suppose an inflationary gap has opened and the economy is at E₁ Which of the following statements best describes the movement of the economy from ₁ to Select one: A The inflationary gap puts upward pressure on factor prices and AS shifts upward. Simultaneously, the Bank of Canada validates the demand shock, thus shifting the AD curve further to the right. B. The inflationary gap puts upward pressure on factor prices and AS shifts upward. Simultaneously, the Bank of Canada implements a contractionary monetary policy shifting the AD curve to the left. C. The inflationary gap causes an increase in the expectations of the future inflation. As a result, the AS curve shifts upward and the AD curve shifts to the right D. The inflationary gap generates excess demand for labour, which causes the AD curve to shift to the right. The adjustment process then shifts the AS curve upward. The economy's adjustment process causes the economy to move from 5 to 6₂

Macroeconomics: Principles and Policy (MindTap Course List)
Macroeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN:9781305280601
Author:William J. Baumol, Alan S. Blinder
Publisher:William J. Baumol, Alan S. Blinder
Chapter10: Bringing In The Supply Side: Unemployment And Inflation?
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FIGURE 14-2 10/01 430 AST ASO Alt ADI ADD Heal CDP Time left 0:16:15 Refer to Figure 14-2. Suppose an inflationary gap has opened and the economy is at ₁. Which of the following statements best describes the movement of the economy from E₁ to Select one: A. The inflationary gap puts upward pressure on factor prices and AS shifts upward. Simultaneously, the Bank of Canada validates the demand shock, thus shifting the AD curve further to the right. B. The inflationary gap puts upward pressure on factor prices and AS shifts upward. Simultaneously, the Bank of Canada implements a contractionary monetary policy. shifting the AD curve to the left. C The inflationary gap causes an increase in the expectations of the future inflation. As a result, the AS curve shifts upward and the AD curve shifts to the right D. The inflationary gap generates excess demand for labour, which causes the AD Curve to shift to the right. The adjustment process then shifts the AS curve upward. The economy's adjustment process causes the economy to move from ₁ to
Transcribed Image Text:FIGURE 14-2 10/01 430 AST ASO Alt ADI ADD Heal CDP Time left 0:16:15 Refer to Figure 14-2. Suppose an inflationary gap has opened and the economy is at ₁. Which of the following statements best describes the movement of the economy from E₁ to Select one: A. The inflationary gap puts upward pressure on factor prices and AS shifts upward. Simultaneously, the Bank of Canada validates the demand shock, thus shifting the AD curve further to the right. B. The inflationary gap puts upward pressure on factor prices and AS shifts upward. Simultaneously, the Bank of Canada implements a contractionary monetary policy. shifting the AD curve to the left. C The inflationary gap causes an increase in the expectations of the future inflation. As a result, the AS curve shifts upward and the AD curve shifts to the right D. The inflationary gap generates excess demand for labour, which causes the AD Curve to shift to the right. The adjustment process then shifts the AS curve upward. The economy's adjustment process causes the economy to move from ₁ to
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