Consumer confidence affects the final price level of an expansionary policy. In this graph, what is the difference in price level between consumer confidence increasing and consumer confidence not increasing?
a. PL2 for consumer confidence increasing; PL1 for consumer confidence not increasing
b. PL1 for consumer confidence increasing; PL2 for consumer confidence not increasing.
c. PL4 for consumer confidence increasing; PL2 for consumer confidence not increasing
d. PL3 for consumer confidence increasing; PL4 for consumer confidence not increasing
c. PL4 for consumer confidence increasing; PL2 for consumer confidence not increasing
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The short-run Phillips curve is downward sloping because
A) the expected inflation rate is zero in the short run. B) the economy always returns to full employment. C) reducing the unemployment rate will reduce the inflation rate in the short run. D) in the long run, the expected inflation rate equals the actual inflation rate. E) the unemployment rate can be above or below the natural unemployment rate.
Which of the following will not occur as the result of a decrease in net taxes?
A) a shift to the left of the supply curve for loanable funds B) decreased government saving C) decreased household saving D) all of the above