Spain's current GDP is less than its full employment equilibrium because of a supply shock due to an increase in oil prices. According to the Natural Rate Hypothesis, there will be an adjustment process. without any policy interference. Check the correct answer. 1. Due to lower production, demand for labor will fall, wages will go down, costs will decrease and the AS curve will shift to the right. 2. Because of lower production, the AS will shift to the left. 3.Because of lower production, prices will fall, demand will get stimulated and AD will shift to the right. 4. Because of lower production, wages will increase, costs will go up and the AS will shift to the right.
Spain's current GDP is less than its full employment equilibrium because of a supply shock due to an increase in oil prices. According to the Natural Rate Hypothesis, there will be an adjustment process. without any policy interference. Check the correct answer. 1. Due to lower production, demand for labor will fall, wages will go down, costs will decrease and the AS curve will shift to the right. 2. Because of lower production, the AS will shift to the left. 3.Because of lower production, prices will fall, demand will get stimulated and AD will shift to the right. 4. Because of lower production, wages will increase, costs will go up and the AS will shift to the right.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Spain's current GDP is less than its full employment equilibrium because of a supply shock due to an increase in oil
1. Due to lower production, demand for labor will fall, wages will go down, costs will decrease and the AS curve will shift to the right.
2. Because of lower production, the AS will shift to the left.
3.Because of lower production, prices will fall, demand will get stimulated and AD will shift to the right.
4. Because of lower production, wages will increase, costs will go up and the AS will shift to the right.
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