1. Which of the following could have caused the AD curve to shift from ADo to AD1 in Figure B? a) decrease in net exports b) decrease in business confidence c) increase in taxes d) All of the above. e) None of the above.
1. Which of the following could have caused the AD curve to shift from ADo to AD1 in Figure B? a) decrease in net exports b) decrease in business confidence c) increase in taxes d) All of the above. e) None of the above.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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b56 QUESTIONS GO WITH CHART
1. Which of the following could have caused the AD curve to shift from ADo to AD1 in Figure B?
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a) decrease in net exports |
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b) decrease in business confidence |
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c) increase in taxes |
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d) All of the above. |
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e) None of the above. |
2. Possible causes of the shift in AS from ASo to AS1 in Figure D, include:
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a) an embargo on petroleum imports to this economy. |
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b) a "tight money" policy of the Federal Reserve. |
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c) higher wage demands by labor unions. |
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d) all of the above. |
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e) (a) and (c) only |
3. Assuming that subscript "o" signifies the original position and subscript "1" the new position of the curves, which of these graphs depicts the scenario of a classical recession?
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a) Figure A |
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b) Figure B |
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c) Figure C |
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d) Figure D |
Transcribed Image Text:The image consists of four graphs labeled as Figures A, B, C, and D. Each graph illustrates the relationship between the price level (P level) and real GDP (Q) using aggregate demand and supply curves.
**Figure A:**
- The vertical axis represents the price level ranging from 0 to 60.
- The horizontal axis represents real GDP, denoted as Q, ranging from 0 to 50.
- Two lines are shown:
- A downward-sloping line labeled AD0 (initial aggregate demand).
- A downward-sloping line labeled AD1 (shifted aggregate demand).
- An upward-sloping line labeled AS0 (initial aggregate supply).
**Figure B:**
- Similar axis labels as Figure A with price level and real GDP.
- Two lines are shown:
- A downward-sloping line labeled AD0.
- An upward-sloping line labeled AS0.
- The AD1 line indicating a shift.
**Figure C:**
- Axis labels are consistent with Figures A and B.
- The graph includes:
- A downward-sloping line labeled AD0.
- An upward-sloping line labeled AS0.
- An upward-sloping line labeled AS1 (shifted aggregate supply).
**Figure D:**
- Same axis labels as previous graphs.
- The lines shown are:
- A downward-sloping line labeled AD0.
- An upward-sloping line labeled AS0.
- An upward-sloping line labeled AS1.
In summary, these graphs depict shifts in aggregate demand and supply, showing initial and shifted positions for both. The interactions between these curves represent changes in price level and real GDP, illustrating economic equilibrium adjustments.
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