Refer to the figure. Suppose that the economy is currently operating at the intersection of AS and AD 2 , and that the full-employment level of output is Y. If contractionary fiscal policy and accompanying multiplier effects move aggregate demand from AD 2 to AD 1 , what will be the effect on real GDP and the price level?





A.  Real GDP will fall to Y and the price level will fall to P 0 , assuming a ratchet effect occurs.

B.  Real GDP will fall to X and the price level will remain unchanged, assuming a ratchet effect occurs.

C.  Real GDP will fall to X and the price level will fall to P 0 , assuming a ratchet effect occurs.

D.  Real GDP will fall to Y and the price level will remain unchanged, assuming a ratchet effect

occurs.


B.  Real GDP will fall to X and the price level will remain unchanged, assuming a ratchet effect occurs.

Economics

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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 

A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward

Economics

In the economic way of thinking, the right to coerce adults is

A) immoral. B) a property right. C) the most efficient way for management to control labor. D) necessarily antithetical to a free and open society. E) good because it's rooted in the Old Testament.

Economics

Among countries that purchased U.S. stocks and bonds in 2015, China was the biggest customer, accounting for over 50 percent of all purchases

Indicate whether the statement is true or false

Economics

Refer to the above payoff matrix for the profits (in $ millions) of two firms (A and B) making a decision to advertise or not. Which of the following is the outcome of the dominant strategy without cooperation?

A) Both firm A and firm B choose not to advertise. B) Both firm A and firm B choose to advertise. C) Firm A chooses to advertise while firm B chooses not to advertise. D) Firm A chooses not to advertise while firm B chooses to advertise.

Economics