When output increases from Q1 and the price level decreases from P1, this change will:
Refer to the graph above.
A. Be caused by a shift in the aggregate supply curve from AS1 to AS2
B. Be caused by a shift in the aggregate supply curve from AS1 to AS3
C. Result in a movement along the aggregate demand curve from e1 to e2
D. Result in a movement along the aggregate demand curve from e3 to e1
B. Be caused by a shift in the aggregate supply curve from AS1 to AS3
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Aggregate income equals: a. the sum of income earned by all laborers in the world economy
b. the sum of income earned by all workers in the private sector. c. the sum of the income earned by all the resource suppliers in an economy. d. the total income of all employees after payment of income tax. e. the total income of all employees after purchases of necessities.
Answer the following statements true (T) or false (F)
1. The impact of a hurricane in Florida would be an example of a random fluctuation in business activity. 2. During a trough in the business cycle, the economy eventually reaches the bottleneck stage. 3. During a contraction in the business cycle, the multiplier effect leads to cumulative declines in output, employment, and income. 4. Stabilizing measures by the federal government eliminate the business cycle. 5. The U.S. economy has experienced no minor cycles since World War II.
In Figure 1 above if the economy were at Y3 then we would expect there to be:
A. a decrease in production since PAE < actual output. B. an increase in production since PAE < actual output. C. an increase in production since PAE > actual output. D. no change in production since PAE = actual output.
If the Fed has a strong preference for stable prices relative to output, the ________ curve is relatively ________.
A. AD; steep B. AS; steep C. AD; flat D. AS; flat