Figure 36-1.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the right-hand diagram,U represents the unemployment rate.
-Refer to Figure 36-1.Suppose points F and G on the right-hand graph represent two possible outcomes for an imaginary economy in the year 2012,and those two points correspond to points B and C,respectively,on the left-hand graph.Also suppose we know that the price index equaled 120 in 2011.Then the numbers 115 and 130 on the vertical axis of the left-hand graph would have to be replaced by
A)155 and 175,respectively.
B)138 and 156,respectively.
C)137.5 and 154.75,respectively.
D)135 and 150,respectively.

Question

Figure 36-1.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the right-hand diagram,U represents the unemployment rate.  
-Refer to Figure 36-1.Suppose points F and G on the right-hand graph represent two possible outcomes for an imaginary economy in the year 2012,and those two points correspond to points B and C,respectively,on the left-hand graph.Also suppose we know that the price index equaled 120 in 2011.Then the numbers 115 and 130 on the vertical axis of the left-hand graph would have to be replaced by
A)155 and 175,respectively. 
B)138 and 156,respectively. 
C)137.5 and 154.75,respectively. 
D)135 and 150,respectively.

Quizplus · Accepted Answer

The price index in 2011 is 120. If the numbers on the vertical axis need to be adjusted to reflect the same relative changes, they should be calculated as follows: 115/120 * 120 = 138 and 130/120 * 120 = 156.