The economy of Ashenvale is currently in a long-run equilibrium, depicted by point E on the graph. Suppose that there is an AD shock to the economy and the AD curve shifts right, as shown by the AD, curve on the graph. Which of the following factors would be the most likely cause of the shock? O A. a decrease in investment expenditures O B. an increase in the wage rate O C. a decrease in imports O D. an appreciation of the dollar O E. a decrease in the price of oil Price Level (P) 2,400 2,000+ 1,600+ 1,200 800- 400+ 0+ 2,000 Economy of Ashenvale 4,000 Eo 6,000 Real GDP (Y) ASO E₁ 8,000 AD₁ ADO 10,000

The economy of Ashenvale is currently in a long-run equilibrium, depicted by point E on the graph. Suppose that there is an AD shock to the economy and the AD curve shifts right, as shown by the AD, curve on the graph. Which of the following factors would be the most likely cause of the shock? O A. a decrease in investment expenditures O B. an increase in the wage rate O C. a decrease in imports O D. an appreciation of the dollar O E. a decrease in the price of oil Price Level (P) 2,400 2,000+ 1,600+ 1,200 800- 400+ 0+ 2,000 Economy of Ashenvale 4,000 Eo 6,000 Real GDP (Y) ASO E₁ 8,000 AD₁ ADO 10,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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