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12.3 Shocks to the System

Question 20

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12.3 Shocks to the System
Refer to the information provided in Figure 12.3 below to answer the questions that follow. 12.3 Shocks to the System Refer to the information provided in Figure 12.3 below to answer the questions that follow. Figure 12.3 -Refer to Figure 12.3. Assume the economy is at Point A. Higher oil prices shift the aggregate supply curve to AS<sub>2</sub>. If the government decides to counter the effects of higher oil prices by increasing net taxes, then the price level will be ________ than P<sub>2</sub> and output will be ________ than Y<sub>2</sub>. A) greater; greater B) greater; less C) less; less D) less; greater Figure 12.3
-Refer to Figure 12.3. Assume the economy is at Point A. Higher oil prices shift the aggregate supply curve to AS2. If the government decides to counter the effects of higher oil prices by increasing net taxes, then the price level will be ________ than P2 and output will be ________ than Y2.


A) greater; greater
B) greater; less
C) less; less
D) less; greater

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