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-In the New Classical Model in the Figure Above, the Initial

Question 7

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-In the new classical model in the figure above, the initial impact of an anticipated increase in aggregate demand that is less than expected ________. A) increases output from Y<sub>n</sub> to Y<sub>2</sub>, and the inflation rate from P<sub>1</sub> to P<sub>2</sub> B) decreases output from Y<sub>n</sub> to Y<sub>5</sub>, and increases the inflation rate from P<sub>1</sub> to P<sub>5</sub> C) decreases output from Y<sub>n</sub> to Y<sub>4</sub>, and increases the inflation rate from P<sub>1</sub> to P<sub>4</sub> D) does not change output and increases the inflation rate from P<sub>1</sub> to P<sub>3</sub>
-In the new classical model in the figure above, the initial impact of an anticipated increase in aggregate demand that is less than expected ________.


A) increases output from Yn to Y2, and the inflation rate from P1 to P2
B) decreases output from Yn to Y5, and increases the inflation rate from P1 to P5
C) decreases output from Yn to Y4, and increases the inflation rate from P1 to P4
D) does not change output and increases the inflation rate from P1 to P3

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