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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Use the figure below to answer the next question.
The most likely cause of a shift from AB to CD would be a(n)
A. recession. B. increase in the price level. C. increase in productivity. D. decrease in the size of the labor force.
The elasticity of supply does NOT depend on
A) resource substitution possibilities. B) the fraction of income spent on the product. C) the time elapsed since the price change. D) none of the above because all of the factors listed affect the elasticity of supply.
The preferred habitat theory of the term structure is closely related to the
A) expectations theory of the term structure. B) segmented markets theory of the term structure. C) liquidity premium theory of the term structure. D) the inverted yield curve theory of the term structure.
All of the following are likely results of a negative demand shock EXCEPT
A) a negative output gap. B) lower inflation. C) IS shifts to the left. D) Phillips curve shifts to the left.