Assume an economy operates in the intermediate range of its aggregate supply curve. For each of the following changes in conditions, state the direction of the effect on: aggregate demand, aggregate supply, price level, real GDP. (a) A decrease in government expenditure in infrastructure (b) A severe recession occurs in a country which has been a major importer of the nation’s exports. (c) The federal government increases business taxes with diagram
Assume an economy operates in the intermediate range of its aggregate supply curve. For each of the following changes in conditions, state the direction of the effect on: aggregate demand, aggregate supply, price level, real GDP. (a) A decrease in government expenditure in infrastructure (b) A severe recession occurs in a country which has been a major importer of the nation’s exports. (c) The federal government increases business taxes with diagram
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Assume an economy operates in the intermediate range of its
curve
effect on: aggregate
(a) A decrease in government expenditure in infrastructure
(b) A severe recession occurs in a country which has been a major importer of the
nation’s exports.
(c) The federal government increases business taxes
with diagram
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