AS, curve on the graph. Which of the following factors could have caused this shock? A. a decrease in investment expenditures B. a decrease in the price of oil C. a decrease in government spending D. an increase in exports E. an increase in the factor prices Price Level (P)

AS, curve on the graph. Which of the following factors could have caused this shock? A. a decrease in investment expenditures B. a decrease in the price of oil C. a decrease in government spending D. an increase in exports E. an increase in the factor prices Price Level (P)

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

The economy of Ashenvale is currently in a long-run
equilibrium, depicted by point E. on the graph.
Suppose that there is an AS shock to the economy
and the AS curve shifts to the right, as shown by the
AS, curve on the graph.
Which of the following factors could have caused
this shock?
A. a decrease in investment expenditures
B. a decrease in the price of oil
C. a decrease in government spending
OD. an increase in exports
OE. an increase in the factor prices
Price Level (P)
2,400-
2,000-
1,600-
1,200-
800-
400-
0+
2,000
Economy of Ashenvale
4,000
¡Y*
6,000
Real GDP (Y)
ASO
Eo
8,000
AS₁
ADO
10,0

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