Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2.
B. P2 and Y1.
C. P3 and Y1.
D. P3 and Y2.
Answer: D
You might also like to view...
Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Explain the difference between the Moving Average and Exponential Smoothing approaches to forecasting
What will be an ideal response?
Fixing the insolvency problem caused by the Great Recession, the U.S. Federal Reserve as reluctant to purchase toxic assets from banks because:
a. It would transfer the problem to the Federal Reserve but might not solve the underlying causes. b. Toxic security purchases had to be funded, and the Fed already had a major debt problem. c.The Fed could be accused of nationalizing the U.S. financial system. d. All of the above.
Roundabout trade decreases production
a. True b. False Indicate whether the statement is true or false