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Price Level Ps P₂ P₁ Y₁ LRAS Y₂ an increase in taxes O a reduction of the money supply O revision upward in price expectation Orising menu costs Y3 SRAS₂ AD₁ SRAS₁ Quantity of Output A shift from SRAS1 to SRAS2 might be cuased by which of the following? AD₂

Price Level Ps P₂ P₁ Y₁ LRAS Y₂ an increase in taxes O a reduction of the money supply O revision upward in price expectation Orising menu costs Y3 SRAS₂ AD₁ SRAS₁ Quantity of Output A shift from SRAS1 to SRAS2 might be cuased by which of the following? AD₂

ENGR.ECONOMIC ANALYSIS
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 2** **Graph Explanation:** The graph provided is an economic graph illustrating the interaction between the Price Level and the Quantity of Output. It plots the Long-Run Aggregate Supply (LRAS), Short-Run Aggregate Supply (SRAS), and Aggregate Demand (AD). The vertical axis represents the Price Level, while the horizontal axis represents the Quantity of Output. Key points in the graph: - **LRAS**: Long-Run Aggregate Supply, represented by a vertical line, indicating full employment output that does not change with the price level. - **SRAS1 to SRAS2**: Short-Run Aggregate Supply curves, showing a shift from an initial position (SRAS1) to a new position (SRAS2). - **AD1 to AD2**: Aggregate Demand curves, demonstrating the levels of output at different price levels. - **Price Levels (P1, P2, P3)**: Different price points where the AD and SRAS intersect. - **Output Levels (Y1, Y2, Y3)**: Different quantities of output corresponding to the intersections of AD and SRAS at various price levels. **Question:** A shift from SRAS1 to SRAS2 might be caused by which of the following? - a) a reduction of the money supply - b) revision upward in price expectation - c) rising menu costs - d) an increase in taxes
Transcribed Image Text:**QUESTION 2** **Graph Explanation:** The graph provided is an economic graph illustrating the interaction between the Price Level and the Quantity of Output. It plots the Long-Run Aggregate Supply (LRAS), Short-Run Aggregate Supply (SRAS), and Aggregate Demand (AD). The vertical axis represents the Price Level, while the horizontal axis represents the Quantity of Output. Key points in the graph: - **LRAS**: Long-Run Aggregate Supply, represented by a vertical line, indicating full employment output that does not change with the price level. - **SRAS1 to SRAS2**: Short-Run Aggregate Supply curves, showing a shift from an initial position (SRAS1) to a new position (SRAS2). - **AD1 to AD2**: Aggregate Demand curves, demonstrating the levels of output at different price levels. - **Price Levels (P1, P2, P3)**: Different price points where the AD and SRAS intersect. - **Output Levels (Y1, Y2, Y3)**: Different quantities of output corresponding to the intersections of AD and SRAS at various price levels. **Question:** A shift from SRAS1 to SRAS2 might be caused by which of the following? - a) a reduction of the money supply - b) revision upward in price expectation - c) rising menu costs - d) an increase in taxes
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