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Exhibit 17-3 Aggregate Demand and Aggregate Supply Curves as Shown

Question 96

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Exhibit 17-3 Aggregate demand and aggregate supply curves Exhibit 17-3 Aggregate demand and aggregate supply curves As shown in Exhibit 17-3, if people behave according to adaptive expectations theory, an increase in the aggregate demand curve from AD<sub>1</sub> to AD<sub>2</sub> will cause the economy to move: A) from E<sub>1</sub> to E<sub>2</sub> initially and then eventually move back to E<sub>1</sub>. B) directly from E<sub>1</sub> to E<sub>2</sub> and then remain at E<sub>2</sub>. C) directly from E<sub>1</sub> to E<sub>3</sub> and then remain at E<sub>3</sub>. D) from E<sub>1</sub> to E<sub>2</sub> initially and then eventually move to E<sub>3</sub>. As shown in Exhibit 17-3, if people behave according to adaptive expectations theory, an increase in the aggregate demand curve from AD1 to AD2 will cause the economy to move:


A) from E1 to E2 initially and then eventually move back to E1.
B) directly from E1 to E2 and then remain at E2.
C) directly from E1 to E3 and then remain at E3.
D) from E1 to E2 initially and then eventually move to E3.

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