Solved

Refer to the Graph Below

Question 112

Multiple Choice

Refer to the graph below.Assume that the economy is in initial equilibrium where AS1 intersects AD1.Then a supply shock occurs that shifts AS1 to AS2.If the government counters with an expansionary fiscal policy that shifts AD1 to AD2, then it is most likely that: Refer to the graph below.Assume that the economy is in initial equilibrium where AS<sub>1</sub> intersects AD<sub>1</sub>.Then a supply shock occurs that shifts AS<sub>1</sub> to AS<sub>2</sub>.If the government counters with an expansionary fiscal policy that shifts AD<sub>1</sub> to AD<sub>2</sub>, then it is most likely that: A) AD<sub>2</sub> will shift to AD<sub>1</sub>. B) AS<sub>2</sub> will shift to AS<sub>1</sub>. C) AS<sub>2</sub> will shift to AS<sub>3</sub>. D) AS<sub>2</sub> will shift to AS<sub>3</sub> and AD<sub>2</sub> will shift to AD<sub>1</sub>.


A) AD2 will shift to AD1.
B) AS2 will shift to AS1.
C) AS2 will shift to AS3.
D) AS2 will shift to AS3 and AD2 will shift to AD1.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q41: Adverse aggregate supply shocks would result in<br>A)a

Q107: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB6686/.jpg" alt=" Refer to the

Q108: Other things equal, an increase in the

Q110: Economists often recommend active monetary policy, and

Q111: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB6686/.jpg" alt=" Refer to the

Q113: The short-run aggregate supply curve:<br>A)Becomes steeper the

Q114: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB6686/.jpg" alt=" The long-run Phillips

Q115: Many economists doubt the proposition that supply-side

Q116: The Laffer Curve suggests that lower tax

Q117: Refer to the graph given below. <img