Ral GDP the graph, we see that long-run aggregate supply decreased during the Great ession. This was because of a decline in housing prices and the subsequent ncial crisis. Why did these factors cause long-run aggregate supply to decrease? a) They caused oil and gas prices to increase, causing inflation.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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48

Use the following graph to answer the next seven questions. The graph depicts an
economy where aggregate demand and long-run aggregate supply (LRAS) have
decreased. Short-run aggregate supply (SRAS) is not shown; it has decreased, as well.
Price leel
LRAS JURAS
Real GDP
On the graph, we see that long-run aggregate supply decreased during the Great
Recession. This was because of a decline in housing prices and the subsequent
financial crisis. Why did these factors cause long-run aggregate supply to decrease?
a) They caused oil and gas prices to increase, causing inflation.
O b) They caused household wealth and expected income to decline.
OC) They caused permanent changes in the market for loanable funds.
O d) They caused unemployment to remain at normal levels.
O e) They caused deflation and an increase in the value of the dollar.
Transcribed Image Text:Use the following graph to answer the next seven questions. The graph depicts an economy where aggregate demand and long-run aggregate supply (LRAS) have decreased. Short-run aggregate supply (SRAS) is not shown; it has decreased, as well. Price leel LRAS JURAS Real GDP On the graph, we see that long-run aggregate supply decreased during the Great Recession. This was because of a decline in housing prices and the subsequent financial crisis. Why did these factors cause long-run aggregate supply to decrease? a) They caused oil and gas prices to increase, causing inflation. O b) They caused household wealth and expected income to decline. OC) They caused permanent changes in the market for loanable funds. O d) They caused unemployment to remain at normal levels. O e) They caused deflation and an increase in the value of the dollar.
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