Figure 8.3 Price Level Long run Aggregate Supply A B AS₁ AS2 AD1 AD2 Quantity of Output Long run Aggregate Supply = Potential GDP Refer to Figure 8.3 above. If the economy is at point A, which of the following would cause a change from AD1 to AD2? An increase in expected future inflation. ○ An increase in expected future profit. ○ A tax cut or an increase in either transfer payments. O An increase in the interest rate or a decrease in the quantity of money.
Figure 8.3 Price Level Long run Aggregate Supply A B AS₁ AS2 AD1 AD2 Quantity of Output Long run Aggregate Supply = Potential GDP Refer to Figure 8.3 above. If the economy is at point A, which of the following would cause a change from AD1 to AD2? An increase in expected future inflation. ○ An increase in expected future profit. ○ A tax cut or an increase in either transfer payments. O An increase in the interest rate or a decrease in the quantity of money.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter24: The Aggregate Demand/aggregate Supply Model
Section: Chapter Questions
Problem 3SCQ: The short run aggregate supply curve was constructed assuming that as the price of outputs...
Question

Transcribed Image Text:Figure 8.3
Price Level
Long run
Aggregate
Supply
A
B
AS₁
AS2
AD1
AD2
Quantity of Output
Long run Aggregate Supply = Potential GDP
Refer to Figure 8.3 above. If the economy is at point A, which of the following would cause a
change from AD1 to AD2?
An increase in expected future inflation.
○ An increase in expected future profit.
○ A tax cut or an increase in either transfer payments.
O An increase in the interest rate or a decrease in the quantity of money.
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