Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2.
B. P3 and Y1.
C. P2 and Y2.
D. P2 and Y3.
Answer: D
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What will be an ideal response?
Differences in resource endowments are differences in
a. tariffs charged by each country b. consumption patterns across nations c. production patterns across nations d. the quantity, but not the quality, of resources available in different nations e. the quality and quantity of resources available in different nations
An upward shift in the consumption function, other things being equal, could be caused by households:
a. becoming optimistic about the state of the economy. b. becoming pessimistic about the state of the economy. c. expecting future income and wealth to decline. d. None of these.
The deep recession of 1973-1975 was mainly caused by
A. higher oil prices. B. slower money growth. C. flawed technology that caused a drop in TFP. D. an unexplained drop in business optimism.