Solved

Refer to the Graph Below

Question 89

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

Q2: The long-run aggregate supply curve is vertical:<br>A)because

Q3: In the short run, demand-pull inflation will

Q4: Long-run equilibrium occurs where:<br>A)real output is greater

Q16: Using Image 16.1 Global Perspective, which of

Q25: The long-run aggregate supply curve:<br>A)is downward sloping.<br>B)is

Q62: Which factor contributed to the termination of

Q87: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB6686/.jpg" alt=" Refer to the

Q92: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB6686/.jpg" alt=" Refer to the

Q94: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB6686/.jpg" alt=" Refer to the

Q106: The Phillips Curve is based on the