Question 3 1 pts If the economy experiences simultaneous negative aggregate dema

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Question 3 1 pts If the economy experiences simultaneous negative aggregate demand and aggregate supply shocks, the new equilibrium price leveland the new equilibrium level of aggregate output O will be higher; may be higher, lower, or not change O will he higher; will be lower may be higher, lower, or not change, will be lower O will he lower; will be lower Question 4 1 pts If the economy experiences simultaneous negative aggregate demand and aggregate supply shocks, and the Fed decides NOT to intervene with expansionary policy. Short- run aggregate supply will eventually shift back to the right, which will eventually bring the cconomy o back to the original equilibrium price at a O back to potential GDP at a higher price level. O back to the original equilibrium price at a higher level of aggregate output. aggregate out back to potential GDP at a lower price level. Question 5 1 pts Which of the following is most likely to have an impact on the growth of productivity? o an increase in the labor supply o improvements in worker training O a decrease in the price1

Explanation / Answer

Question 3

Negative aggregate demand and aggregate supply shocks means that both aggregate demand curve and aggregate supply curve will shift to the left.

When both aggregate demand curve and aggregate supply curve shifts to the left, there is decrease in aggregate output.

However, impact on the price level depends on the magnitude of the shift of both aggregate demand curve and the aggregate supply curve.

Hence, the correct answer is the option (3) [may be higher, lower, or not change; will be lower].

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