**Transcription and Analysis:****Question 2:** Possible causes of the shift in AS from AS₀ to AS₁ in Figure D, include:a) an embargo on petroleum imports to this economy. b) a "tight money" policy of the Federal Reserve. c) higher wage demands by labor unions. d) all of the above. e) (a) and (c) only **Question 3:** Assuming that subscript "0" signifies the original position and subscript "1" the new position of the curves, which of these graphs depicts the scenario of a classical recession?a) Figure A b) Figure B c) Figure C d) Figure D **Graphs Explanation:**- **Figure A:** - Contains a downward-shifting AD curve (from AD₀ to AD₁), and an AS curve labeled AS₀. - The vertical axis represents the price level, and the horizontal axis represents real GDP.- **Figure B:** - Similar layout, with a downward-shifting AD curve (from AD₀ to AD₁) and an AS curve labeled AS₀. - **Figure C:** - Shows a leftward shift of the AS curve (from AS₀ to AS₁), while AD remains the same (AD₀).- **Figure D:** - Illustrates a leftward shift in the AS curve from AS₀ to AS₁, with a static AD curve labeled AD₀.In these graphs, AS represents Aggregate Supply, and AD represents Aggregate Demand. The shifts indicate changes in economic conditions, such as supply constraints or changes in demand. In a classical recession, typically the AD curve shifts leftward, indicating reduced economic output and lower price levels due to decreased demand.

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2. Possible causes of the shift in AS from ASo to AS1 in Figure D, include: a) an embargo on petroleum imports to this economy. b) a "tight money" policy of the Federal Reserve. c) higher wage demands by labor unions. d) all of the above. 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? a) Figure A b) Figure B c) Figure C d) Figure D Figure A Figure с 857380 60 40 20 10 60 50 40 30 20 10 0 P level 0 P level 0 10 10 20 30 40 real GDP = Q 20 30 real GDP = Q 40 ASO ADO -AD1- 50 ASO AS1 ADO 50 Figure B Figure D 60 50 40 30 20 10 0 60 50 40 30 20 10 0 P level 0 P level 0 10 10 20 30 real GDP = Q 40 20 30 40 real GDP = Q ADO ASO AD1 50 AS1 ASO ADO 50

2. Possible causes of the shift in AS from ASo to AS1 in Figure D, include: a) an embargo on petroleum imports to this economy. b) a "tight money" policy of the Federal Reserve. c) higher wage demands by labor unions. d) all of the above. 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? a) Figure A b) Figure B c) Figure C d) Figure D Figure A Figure с 857380 60 40 20 10 60 50 40 30 20 10 0 P level 0 P level 0 10 10 20 30 40 real GDP = Q 20 30 real GDP = Q 40 ASO ADO -AD1- 50 ASO AS1 ADO 50 Figure B Figure D 60 50 40 30 20 10 0 60 50 40 30 20 10 0 P level 0 P level 0 10 10 20 30 real GDP = Q 40 20 30 40 real GDP = Q ADO ASO AD1 50 AS1 ASO ADO 50

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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