Figure 35-4.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the left-hand diagram,the price level is measured on the vertical axis;on the right-hand diagram,the inflation rate is measured on the vertical axis.
-Refer to Figure 35-4.Assume the figure depicts possible outcomes for the year 2018.In 2018,the economy is at point A on the left-hand graph,which corresponds to point A on the right-hand graph.The price level in the year 2017 was
A)106.
B)108.
C)110.
D)112.

Question

Figure 35-4.The left-hand graph shows a short-run aggregate-supply (SRAS)curve and two aggregate-demand (AD)curves.On the left-hand diagram,the price level is measured on the vertical axis;on the right-hand diagram,the inflation rate is measured on the vertical axis.  
-Refer to Figure 35-4.Assume the figure depicts possible outcomes for the year 2018.In 2018,the economy is at point A on the left-hand graph,which corresponds to point A on the right-hand graph.The price level in the year 2017 was
A)106. 
B)108. 
C)110. 
D)112.

Quizplus · Accepted Answer

The economy is at point A, which corresponds to a price level of 110 on the right-hand graph for the year 2018. Since the question asks for the price level in 2017, and assuming the graphs show a progression over time, the price level in 2017 would be the same as in 2018 if no other information is provided.