Refer to the Figure B. Assuming this market is representative of the economy as a whole, a negative demand shock will most likely: 1) cause inflation. 2) increase unemployment. 3) lower prices, but leave output unaffected. 4) reduce both prices and output.

Refer to the Figure B. Assuming this market is representative of the economy as a whole, a negative demand shock will most likely: 1) cause inflation. 2) increase unemployment. 3) lower prices, but leave output unaffected. 4) reduce both prices and output.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

ChapterB: Indifference Curves

Section: Chapter Questions

Problem 1RQ: Exercise B1 What point is preferred along an indifference Curve?

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Question

Refer to the Figure B. Assuming this market is representative of the economy as a whole, a negative demand shock will most likely:

1)	cause inflation.

2)	increase unemployment.

3)	lower prices, but leave output unaffected.

4)	reduce both prices and output.

Figure A
Figure B
Price
Price
P3
P2
P
D3
D3
P,
D2
D2
Q,
Quantity
Q, Q2 Q3
Quantity

Definition Definition State in which an individual is without work, despite actively seeking employment opportunities. The unemployment rate refers to the percentage of the workforce that is currently unemployed. Unemployment is one of the key indicators of the conditions prevailing in an economy. It is therefore considered a barometer that points out the condition of an economy.

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