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

Suppose that a nation has adopted a fixed exchange rate with another country, and has a persistent trade deficit. What is most likely to happen?

a. a gradual increase in the value of its currency b. a gradual decrease in the value of its currency c. a "run" on its currency and a sudden appreciation d. a "run" on its currency and a sudden devaluation

A drought destroys much of the peach crop. As a result, consumer surplus in the peach market:

A. increases. B. decreases. C. remains unchanged. D. equals the deadweight loss increase.