The classical model does not do a good job of explaining short-run fluctuations in the level of economic activity

Refer to Figure 15-12. In the dynamic AD-AS model, if the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues no policy, then at point B

A) there is pressure on wages and prices to fall. B) the unemployment rate is greater than the natural rate of unemployment. C) firms are producing above capacity. D) incomes and profits are falling.

Refer to the information provided in Figure 9.2 below to answer the question(s) that follow. Figure 9.2Refer to Figure 9.2. Suppose demand for wheat is initially D2. If the price of rice (a substitute for wheat) rises, then demand for wheat will shift to ________. This will ________ the equilibrium price of wheat and individual profit-maximizing firms will produce ________ bushels of wheat.

A. D1; increase; 13 B. D3; increase; 15 C. D3; decrease; 10 D. D1; decrease; 0