Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the long run would be:
A. P1 and Y2.
B. P2 and Y2.
C. P3 and Y1.
D. P2 and Y3.
Answer: D
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Is fiscal policy more or less effective in manipulating aggregate demand in an open economy?
What will be an ideal response?
Which of the following arguments is often used by opponents of Federal Reserve independence?
A) Independence slows the policy decision process. B) Independence causes inflationary pressures to build because of excessive monetary growth. C) Independence leads to conflicts between monetary and fiscal policy. D) Independence causes a concentration of financial power.
Lowering the level of pollution to very close to zero would
A. raise the standard of living. B. have little effect on the standard of living. C. lower the standard of living.
Micro-failures of the marketplace imply that:
A.) we are inequitably distributing output. B.) we are at the wrong point on the production possibilities curve. C.) we are overproducing at a point beyond the production possibilities curve. D.) Both A and B are true.