A change in which of the following parameters would cause a movement along the AD curve $\tilde { Y } _ { t } = \bar { a } - \bar { b } \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$ ?
A) $\overline { \pi }$
B) $\pi _ { t }$
C) $\bar { b }$
D) $\bar { m }$
E) None of these answers are correct.

Question

Quizplus · Accepted Answer

A change in $\pi _ { t }$ (the actual inflation rate) would cause a movement along the AD curve, as it directly affects the output gap $\tilde { Y } _ { t }$ in the equation.

A Change in Which of the Following Parameters Would Cause Y~t=aˉ−bˉmˉ(πt−πˉ)\tilde { Y } _ { t } = \bar { a } - \bar { b } \bar { m } \left( \pi _ { t } - \bar { \pi } \right)Y~t​=aˉ−bˉmˉ(πt​−πˉ)

A Change in Which of the Following Parameters Would Cause $\tilde { Y } _ { t } = \bar { a } - \bar { b } \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$