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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Physical capital is:
A. the talents, training, and education of workers. B. the physical labor of workers. C. the financial resources available for investment. D. the factories and machinery used to produce other goods and services.
The function of money as a store of value diminishes if
A) money is no longer backed by gold. B) prices of goods and services increase. C) people begin to barter. D) interest rates increase.
The relationship between consumer spending and disposable personal income is
A) a negative relationship. B) an inverse relationship. C) a direct relationship. D) independent.
If the government decreases spending and taxes by 1,000 units and the marginal propensity to consume is .9, then
a. more information is needed. b. output will decrease by 900. c. output will decrease by 10,000. d. output will increase by 10,000.