Suppose the shift from AD0 to AD1 and from AS0 to AS1 is the result of fiscal policy
If the effect on aggregate supply was larger than the figure above shows, as a result the price level would be ________ 110 and real GDP would be ________ $17 trillion.
A) equal to; equal to
B) equal to; larger than
C) higher than; larger than
D) smaller than; less than
E) smaller than; larger than
E
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Which of the following represents a long-run adjustment?
A. A farmer uses an extra dose of fertilizer on his corn crop. B. Unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants. C. A steel manufacturer cuts back on its purchases of coke and iron ore. D. A supermarket hires four additional clerks.
In what way do policymakers have to face a trade-off between inflation and unemployment?
A. The cost of reducing inflation by restrictive fiscal and monetary policies is a temporary increase in unemployment. B. The cost of reducing inflation by restrictive fiscal and monetary policies is a permanent increase in unemployment. C. The cost of reducing unemployment by expansionary fiscal and monetary policies is virtually nonexistent. D. The cost of reducing unemployment by expansionary fiscal and monetary policies involves higher inflation during recessions.