8. Refer to the diagrams. The multiplier associated with fiscal policy thatincreases aggregate demand from AD1 to AD2 is less in graph b than in abecause: *ASASAD, AD,AD, AD2X YZReal GDP0.X YZReal GDP(a)(b)Graph a represents a closed economy while b depicts an open economy.Inflation occurs in b and not in aThe economy is in the vertical range of aggregate supply in a and not inb.Graph a represents an open economy while b depicts a closed economy.Price levelPrice level

When Aggregate demand moves from AD1 to AD2 in graph A, the economy is still in range of subdued…

Answered: 8. Refer to the diagrams. The…

8. Refer to the diagrams. The multiplier associated with fiscal policy that increases aggregate demand from AD1 to AD2 is less in graph b than in a because: *

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

8. Refer to the diagrams. The multiplier associated with fiscal policy that
increases aggregate demand from AD1 to AD2 is less in graph b than in a
because: *
AS
AS
AD, AD,
AD, AD2
X YZ
Real GDP
0.
X YZ
Real GDP
(a)
(b)
Graph a represents a closed economy while b depicts an open economy.
Inflation occurs in b and not in a
The economy is in the vertical range of aggregate supply in a and not inb.
Graph a represents an open economy while b depicts a closed economy.
Price level
Price level

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