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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A competitive market is characterized by
a. the absence of entry barriers b. many buyers with a single seller c. imperfect information d. a differentiated product
The demand for money is based on
A) the demand for consumption, demand for investment, and demand by government. B) the demand for cash, demand for securities, and the demand for real estate. C) a demand for liquidity and wealth. D) the transactions demand, asset demand, and precautionary demand.
Actual unemployment can fall below the natural rate of unemployment due to
A) negative cyclical unemployment. B) structural unemployment. C) frictional unemployment. D) all of the above.
The price elasticity of demand is a measure of
A) the equilibrium price of a product. B) buyers' responsiveness to changes in the price of a product. C) the amount of a product purchased when income increases. D) whether a product is a substitute or a complement. E) how much a change in demand affects the equilibrium price.