Refer to Figure 10.3. A negative demand shock accompanied by an increase in the real interest rate is best represented by ________ in panel (a) and ________ in panel (b)
A) a shift from AE3 to AE2; a movement from point C to point B
B) a shift from AE2 to AE3; a shift from IS1 to IS2
C) a shift from AE2 to AE1; a movement from point B to point A
D) a shift from AE3 to AE1; a movement from point C to point A
D
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Suppose Freeland produces few consumption goods and many investment goods while Liberty Nation produces few investment goods and many consumption goods. Other things equal, you would expect a. per capita income to grow more rapidly in Liberty Nation
b. population to grow faster in Liberty Nation. c. the production possibilities curve for Freeland will shift out more rapidly than that of Liberty Nation. d. that if both countries started with identical production possibilities curves, in twenty years, people in Liberty Nation will be able to produce more consumer goods than people in Freeland.
In a recession, demand for cars falls, and the demand curve in the market for cars
A. shifts to the right. B. shifts to the left. C. remains unchanged. D. slows down.