Answered: 34. The difference between the two sets…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

34. The difference between the two sets of graphs (Figure 1 and Figure 2) is that a) Figure 1 depicts changes in price level only, while Figure 2 shows changes in the rate of inflation. b) Figure 1 shows changes in autonomous spending, while Figure 2 shows changes in supply. c) Figure 1 depicts changes in price level only, while Figure 2 shows changes in autonomous spending (changes independent of price). d) Figure 1 shows changes in the mpc, while Figure 2 shows changes in autonomous spending.

FIGURE 1
FIGURE 2
50
50
AE*
AEo
AEo
40
-AE1
40
AE2
30
AE3
30
20
20
10
10
10 20 30 40 50
10 20 30
40
50
Income: Q
Income (GDP)
40
80
35
70
30
60
25
50
20
40
30
15
ADo
AD*
10
AD
20
10
10
20 30
40
50
10 20 30
40
50
Income: Q
re al GDP
Price Level:P
Spending. Q
price level
Expenditures,
Income

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