Question 1
What sequence of events results from an increase in aggregate demand?
◦ The price level falls, inventories decline, firms respond by increasing output and employment.
◦ The price level falls, inventories increase, firms respond by reducing output and employment.
◦ The price level rises, inventories decline, firms respond by increasing output and employment.
◦ The price level rises, inventories increase, firms respond by increasing output and employment.
Question 2
Refer to the information provided in Figure 28.5 below to answer the question(s) that follow.
Refer to Figure 28.5. If aggregate demand shifts while aggregate supply is stable, the relationship between the price level and the unemployment rate is represented in Panel
◦ A.
◦ B.
◦ C.
◦ D.
Information Processing Model The components of the model operate simultaneously.
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