Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:

A. P3 and Y1.
B. P2 and Y1.
C. P2 and Y3.
D. P1 and Y2.


Answer: B

Economics

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Economics

Suppose a consumption function is given as C = $500 + 0.75YD. The marginal propensity to consume is

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Economics