prslace 11 for at pusit B) becaue Ooreesseofoedsw decrease. shining the aggregat
ID: 1130549 • Letter: P
Question
prslace 11 for at pusit B) becaue Ooreesseofoedsw decrease. shining the aggregate supply curve to AS2. l6) y curve to AS1 curve to AD2 wages and oeher costs hully adjust to changes in prices in the long run, the long-run agregate 17h B) positively sloped. D) vertical e e e d in Figure 12.1 beloue to ansver the questions that follow. ADO Refer no Figure 121. An aggregate demand shift from AD2 to AD0 can be caused by shift 18) B) a decrease in money supply D) an increase in the price level A) a decrease in A) a decrease in taxes ) a decrease in the price level. Refer to Figure 121. Suppose the econorry is at Point A. A(n) Point D can cause a movement to A) increase in aggregate demand C) increase in the price level B) decrease in aggregate demand D) decrease in the price levelExplanation / Answer
For the first question figure is needed. Rest of the questions are answered below.
17) vertical
In the long run output is at full employment level due to flexibility of wages and prices which makes long run aggregate supply curve vertical.
18) decrease in taxes
Decrease in taxes increases disposable income. Consumption depends on disposable income and when disposable income increases consumption increases. This increases aggregate demand and aggregate demand shifts to the right.
19) decrease in price level
Change in price level cause movement along the curve. Decrease in price causes a movement to the right, that is to point D.
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