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12.3 Shocks to the System

Question 166

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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. Lower oil prices shift the aggregate supply curve to AS<sub>0</sub>. If the government decides to counter the effects of lower oil prices by decreasing government spending, then the price level will be ________ than P<sub>0</sub> and output will be ________ than Y<sub>0</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. Lower oil prices shift the aggregate supply curve to AS0. If the government decides to counter the effects of lower oil prices by decreasing government spending, then the price level will be ________ than P0 and output will be ________ than Y0.


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

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