The three figures below show the phases of a disinflation. In part (i), the economy is experiencing a sustained inflation at E, (iii) Phase 3 (ii) Phase 2 (i) Phase 1 AS3 AS2 AS AS2 P. AS2 EA P E3 AD2 AS1 P2 ..... AD, E AD, AD1 Real National Income (GDP) Real National Income (GDP) Real National Income (GDP) The upward movement along the AD, curve in Phase 1 is normally caused by O A. inflationary expectations that cause wages to continue rising. O B. tightening monetary policy by raising interest rates. O C. workers accepting a reduction in their wages. O D. an increase in the productivity of workers. O E. an increase in the NAIRU. Price Level

The three figures below show the phases of a disinflation. In part (i), the economy is experiencing a sustained inflation at E, (iii) Phase 3 (ii) Phase 2 (i) Phase 1 AS3 AS2 AS AS2 P. AS2 EA P E3 AD2 AS1 P2 ..... AD, E AD, AD1 Real National Income (GDP) Real National Income (GDP) Real National Income (GDP) The upward movement along the AD, curve in Phase 1 is normally caused by O A. inflationary expectations that cause wages to continue rising. O B. tightening monetary policy by raising interest rates. O C. workers accepting a reduction in their wages. O D. an increase in the productivity of workers. O E. an increase in the NAIRU. Price Level

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

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Option A is not correct by the way

The three figures below show the phases of a disinflation. In part (i), the economy is experiencing a sustained inflation at E,
(ii) Phase 3
(ii) Phase 2
(i) Phase 1
AS3
AS2
AS3
/AS2
AS2
E4
AS1
AD2
P2
....... E.
P1
AD1
AD,
AD1
Y3 Ty*
Real National Income (GDP)
Y3 Y
Real National Income (GDP)
Real National Income (GDP)
The upward movement along the AD, curve in Phase 1 is normally caused by
O A. inflationary expectations that cause wages to continue rising.
O B. tightening monetary policy by raising interest rates.
O C. workers accepting a reduction in their wages.
O D. an increase in the productivity of workers.
O E. an increase in the NAIRU.

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