Refer to Figure 26-11. In the dynamic model of AD-AS in the figure above, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in
A) real GDP lower than what would occur if no policy had been pursued.
B) short-term interest rates higher than what would occur if no policy had been pursued.
C) unemployment rates higher than what would occur if no policy had been pursued.
D) inflation higher than what would occur if no policy had been pursued.
D
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Which of the following would shift the supply curve to the left?
A) A fall in the expected future price of the good B) A rise in the expected future price of the good C) A rise in technology that lowers the cost of producing the good D) A positive supply shock that brings more output onto the market
If more people buy hybrid cars that have high gas mileage, the equilibrium price of gasoline will ________ and the equilibrium quantity will ________
A) rise; increase B) rise; decrease C) fall; increase D) fall; decrease