43 Which one of the folowing stutomonta negarding the agpegate the gareral price

Question

43 Which one of the folowing stutomonta negarding the agpegate the gareral price leve b. A decroase in the prious of supply and a decroase in the gereral price wreet d A decrease in produdhly will cuse a decrease n croducshrty wi causu a decrmase n the agpregane apply in a cscrease in the general price leeri [1) b and e 21 a ando 131 b 4) 8 15) Al thi statements are oomect Tre 44 Which one of tha Soliowing wil shint he aggregare dsmued curve to the wt? 11 an increase in the general price level 121 2] an incresse in productvty 31 an incresse in net exports 41 a redudion in governmet spending 2 4.5 Which one of the tolowing will shift aggregate supply to the righ? [1] fall i, the general pno ievel 12) an increase in aggregate spanding 3 improvements in productivity 141 a decroase in interest rate L10. The 4.6. An expansionary monetary poicy wil be kess efflective t 11 the aggrogale supply curve is very steep. 2 he multiplier is very sarge. 13] the investment demand is responsive to the interest rate. 4l the aggregate demand curve is very steep.

Explanation / Answer

4.4) statement b is correct (A decrease in prices of imported capital would mean lower production costs, supply curve shifts to the right and prices are lowered)

4.5) A reduction in government spending would shift the aggregate demand curve to the left (less goods/services demanded at the same price level)

4.6) Improvements in productivity would shift the aggregate supply to the right (more produced at the same price level)

4.7) An expansionary monetary policy will be less effective if - the aggregate supply curve is very steep.

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