Fiscal policy is used to shift AD. The outcome depends on the shape of the AS curve - whether AS is upward sloping, vertical or horizontal. It follows that a right shift in aggregate demand will cause no change in price level or output if AS is upward sloping.higher price level, but not higher output if AS is vertical.higher price level, but no change in output if AS is horizontal.higher output, but no change in price level if AS is vertical.

AD or aggregate demand measures the total demand for all final goods and service produced in an…

Answered: Fiscal policy is used to shift AD. The…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Fiscal policy is used to shift AD. The outcome depends on the shape of the AS curve - whether AS is upward sloping, vertical or horizontal. It follows that a right shift in aggregate demand will cause

no change in price level or output if AS is upward sloping.
higher price level, but not higher output if AS is vertical.
higher price level, but no change in output if AS is horizontal.
higher output, but no change in price level if AS is vertical.

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