Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:
A. P4 and Y1.
B. P4 and Y2.
C. P5 and Y1.
D. P5 and Y2.
Answer: D
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"Supply creates its own demand" implies that
A) the very act of supplying a particular level of goods and services will not necessarily equal the level of goods and services demanded. B) the very act of demanding a particular level of goods and services necessarily equals the level of goods and services supplied. C) the very act of supplying a particular level of goods and services necessarily equals the level of goods and services demanded. D) the government will buy up any surplus of goods and services in a country to avoid economic problems.
Conventional economic theory assumes that people
a. care a great deal about fairness. b. are inconsistent over time in their decisionmaking. c. are rational. d. are satisficers.
Refer to the above figure. The figure represents the saving function for the consumer. Point B represents
A) the amount of autonomous consumption. B) the point at which saving equals zero. C) a situation in which saving is negative. D) a situation in which saving is positive.
Explain how automatic stabilizers work
What will be an ideal response?