The growth rate of full-employment output between 2041 and 2042 is Which of the following best explains the economic developments from 2041 to 2042? O The economy experienced cost-push inflation. O The economy operated at full-employment output in 2041, but the subsequent increase in aggregate demand was not enough to restore the economy to full-employment output, leading to a recessionary gap in 2042. A strong increase in aggregate demand allowed the economy to grow out of a recessionary gap in 2041 to full employment in 2042. Which of the following are possible reasons for the rightward shift of the LRAS curve between 2041 and 2042? Check all that apply. An increase in government purchases An increase in consumption spending An increase in the size of the labor force

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Homework (Ch 14)
6. Increase in the aggregate demand and long-run aggregate supply curves
Consider the dynamic aggregate demand and aggregate supply diagram for a hypothetical economy. Between 2041 and 2042, the aggregate demand
curve (AD) shifts from AD₁ to AD2, the short-run aggregate supply curve (SRAS) shifts from SRAS, to SRAS2, and the long-run aggregate supply
curve (LRAS) shifts from LRAS₁ to LRAS₂.
PRICE LEVEL (CPI)
106
LRAS,
AD₁
LRAS₂
SRAS₁
6.6
REAL GDP (Trillions of dollars)
6.8
SRAS₂
AD2
Transcribed Image Text:Homework (Ch 14) 6. Increase in the aggregate demand and long-run aggregate supply curves Consider the dynamic aggregate demand and aggregate supply diagram for a hypothetical economy. Between 2041 and 2042, the aggregate demand curve (AD) shifts from AD₁ to AD2, the short-run aggregate supply curve (SRAS) shifts from SRAS, to SRAS2, and the long-run aggregate supply curve (LRAS) shifts from LRAS₁ to LRAS₂. PRICE LEVEL (CPI) 106 LRAS, AD₁ LRAS₂ SRAS₁ 6.6 REAL GDP (Trillions of dollars) 6.8 SRAS₂ AD2
Homework (Ch 14)
PRICE L
106
AD₁
6.6
REAL GDP (Trillions of dollars)
The inflation rate between 2041 and 2042 is
6.8
The growth rate of full-employment output between 2041 and 2042 is
AD2
Which of the following best explains the economic developments from 2041 to 2042?
O The economy experienced cost-push inflation.
O The economy operated at full-employment output in 2041, but the subsequent increase in aggregate demand was not enough to restore
the economy to full-employment output, leading to a recessionary gap in 2042.
A strong increase in aggregate demand allowed the economy to grow out of a recessionary gap in 2041 to full employment in 2042.
An increase in government purchases
An increase in consumption spending
Which of the following are possible reasons for the rightward shift of the LRAS curve between 2041 and 2042? Check all that apply.
An increase in the size of the labor force
Transcribed Image Text:Homework (Ch 14) PRICE L 106 AD₁ 6.6 REAL GDP (Trillions of dollars) The inflation rate between 2041 and 2042 is 6.8 The growth rate of full-employment output between 2041 and 2042 is AD2 Which of the following best explains the economic developments from 2041 to 2042? O The economy experienced cost-push inflation. O The economy operated at full-employment output in 2041, but the subsequent increase in aggregate demand was not enough to restore the economy to full-employment output, leading to a recessionary gap in 2042. A strong increase in aggregate demand allowed the economy to grow out of a recessionary gap in 2041 to full employment in 2042. An increase in government purchases An increase in consumption spending Which of the following are possible reasons for the rightward shift of the LRAS curve between 2041 and 2042? Check all that apply. An increase in the size of the labor force
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