After a temporary beneficial supply shock hits the economy, general equilibrium is restored by
A) a shift down and to the left of the IS curve.
B) a shift to the left of the FE line.
C) a shift up and to the left of the LM curve.
D) a shift down and to the right of the LM curve.
D
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The figure above shows Sam's budget line. Which of the following would result in Sam's budget line rotating outward and not changing its horizontal intercept?
A) a fall in the price of a pound of coffee B) a rise in the price of a pound of coffee C) a fall in the price of a gallon of gasoline D) a rise in the price of a gallon of gasoline
In a two-period model with production, a shock that shifts the output demand curve to the right, and does not shift the output supply curve
A) causes an increase in the current account surplus and an increase in real output. B) causes no change in the current account surplus and an increase in real output. C) causes a decrease in the current account surplus and no change in real output. D) causes a decrease in the current account surplus and an increase in real output.