Answer b is not correct I am again says answer b is not correct Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point U.The price level is Po. Now, suppose there is an exogenous rise in the price level to P,. Which of the followingstatements describes the likely macroeconomic effects?O A. The AE curve shifts to AE,, a new equilibrium is established at point V, and the economy moves frompoint B to point A along AD°.AE,O B. The AE curve shifts to AE,, a new equilibrium is established at point W, and the economy moves frompoint B to point C along AD°O C. The AE curve shifts to AE,, a new equilibrium is established at point V, and the AD curve shifts from45AD° to AD', and equilibrium from point B to point D.O D. The AE curve shifts to AE,, a new equilibrium is established at point W, and the AD curve shifts fromY2Real ĞDPAD° to AD', and equilibrium moves from point B to point D.Real GDPPrice LevelDesired Aggregate Expenditure

Aggregate demand curve shows the negative relationship between the price level and output of the…

Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point U. The price level is Po. Now, suppose there is an exogenous rise in the price level to P,. Which of the following AE = statements describes the likely macroeconomic effects? O A. The AE curve shifts to AE,, a new equilibrium is established at point V, and the economy moves from AE, point B to point A along AD°. O B. The AE curve shifts to AE,, a new equilibrium is established at point W, and the economy moves from point B to point C along AD°. O C. The AE curve shifts to AE,, a new equilibrium is established at point V, and the AD curve shifts from Y, 'Real GDP AD° to AD', and equilibrium from point B to point D. O D. The AE curve shifts to AE,, a new equilibrium is established at point W, and the AD curve shifts from AD° to AD', and equilibrium moves from point B to point D. Real ĞDP Price Level Desired Aggregate Expenditure

Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point U. The price level is Po. Now, suppose there is an exogenous rise in the price level to P,. Which of the following AE = statements describes the likely macroeconomic effects? O A. The AE curve shifts to AE,, a new equilibrium is established at point V, and the economy moves from AE, point B to point A along AD°. O B. The AE curve shifts to AE,, a new equilibrium is established at point W, and the economy moves from point B to point C along AD°. O C. The AE curve shifts to AE,, a new equilibrium is established at point V, and the AD curve shifts from Y, 'Real GDP AD° to AD', and equilibrium from point B to point D. O D. The AE curve shifts to AE,, a new equilibrium is established at point W, and the AD curve shifts from AD° to AD', and equilibrium moves from point B to point D. Real ĞDP Price Level Desired Aggregate Expenditure

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 2TY

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