The short-run aggregate supply curve is likely to shift to the left when there is an increase in
A) the cost of productive resources
B) productivity
C) the money supply
D) the federal budget deficit
E) imports
Ans: A) the cost of productive resources
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In the above figure, point B represents
A) a recessionary gap. B) a full-employment equilibrium. C) an inflationary gap. D) a decrease in aggregate demand.
If a demand curve shifts left, it implies
A) as a group, consumers are willing and able to pay less for the product. B) as a group, consumers are willing and able to pay more for the product. C) government has regulated how many people can purchase the product. D) the profit motive of the firms is making the price too high.
Refer to the above figure. Suppose the economy is at E and the government uses an expansionary fiscal policy to move the aggregate demand curve to AD 2. In the end, the aggregate demand curve is still AD 1. A possible reason for this is that
A. the economy is already at full employment. B. the increased borrowing causes higher interest rates, which encourage people to save more and increase investment spending due to the extra saving. C. some of the increased government spending is not counted in GDP. D. people increase saving because they anticipate higher future taxes, resulting in a reduction in current consumption spending that offsets the increased government spending.
A trigger strategy
A) is always a dominant strategy. B) is used to punish the player that reneges on agreements. C) is used to reward the player that never reneges on agreements. D) is a best response whenever all players cooperate.