Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the short run would be:
A. P1 and Y2.
B. P2 and Y3.
C. P3 and Y1.
D. P2 and Y2.
Answer: B
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How is positive economics different from normative economics?
The introduction of a new technology that increases the productivity of labor will:
A. decrease the demand for labor B. increase the demand for labor. C. decrease the supply of labor. D. increase the supply of labor.
The short run is
A. the period of time in which the firm can vary its rate of output. B. up to three years. C. the period of time in which the firm cannot change its use of at least one input. D. a year or less.
Economic policies are effective at changing output when
A. the aggregate supply curve is vertical. B. the unemployment rate is at the natural rate. C. the economy is not producing at capacity. D. the economy is producing at its potential output.