Consider a fictional economy of Shana. The following graphs show aggregate suppl

Question

Consider a fictional economy of Shana. The following graphs show aggregate supply and aggregate demand curves for two years—1990 and 2004—in which the economy of Shana experienced growth.

Refer to the following graphs to answer the questions that follow.

True or False: Based on the source of fluctuations, inflation in Shana will be higher when GDP grows relatively quickly. T/F)

1990 2004 AS AS AD AD REAL GDFP REAL GDP Based on these graphs, fluctuations in the growth rate of the economy of Shana come primarily from variations in the rate at which increases. aggregate supply n the source of fluctuations, inflation in Shana will be higher when GDP grows relatively quickly. aggregate demand

Explanation / Answer

Bases on these graphs, fluctuations in the growth rate of the economy of Shana come primarily from variations in the rate at which Aggreagate demand increases.

Bases on the source of fluctuations, inflation in Shana will be higher when GDP grows relatively quicky. - The aswer is TRUE.

because, as we can see frrom the following graphs, In 1990, the rate of increase aggregate demand and aggregate supply is equal, through the which price level remains the same. but In 2004, the rate at which the aggregate demand increase surpasses the increase rate of aggreagte supply. which increase the price level in the economy. In other words, the magintude of increase in aggregate demand is greater than increase in the aggregate supply . this is because, GDP grows quickly and brings inflation in the economy.

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.