Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2.
B. P3 and Y1.
C. P2 and Y2.
D. P2 and Y3.
Answer: D
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In a certain economy, the components of aggregate spending are given by: C = 500 + 0.8(Y - T) - 300rI = 200 - 400rG = 200NX = 10T = 150Given the information about the economy above, the immediate impact on aggregate expenditures of a one-percentage-point increase in the real interest rate (r) from 5 percent to 6 percent is ________, and the eventual impact on short-run equilibrium output is ________.
A. an increase by 700 units; a decrease by 3,500 units. B. a decrease by 35 units, a decrease by 35 units. C. a decrease by 7 units, a decrease by 35 units. D. an increase by 35 units; a decrease by 175 units.
Bill's Lawn service starts the year with 20 lawn mowers. During the year, 3 mowers break and are not worth fixing. Bill also expands his business and buys 10 more mowers. Bill's net investment is ________ mowers
A) 13 B) 7 C) 10 D) 20 E) 27
Assume that concerns about tap water potability increase demand for bottled water, and that the new demand (D’ ) is represented by the following: D’ = MSB’ = 7 – 0.1Q What is the new equilibrium quantity (QE’ ) and price (PE’) in the U.S. bottled water market?
Suppose that the U.S. market for bottled water is modeled as follows: S = MSC = 1 + 0.3Q D = MSB = 5 – 0.1Q, whereQ is billions of gallons per year and MSC and MSB are in dollars per gallon.
Which of the following would not interfere with market equilibria?
a. a minimum wage b. a rent control c. a non-binding price floor d. a binding price ceiling