The Economy is at Point B today after being at Point A for the past 5 years. Which of the following could cause the Economy to return to Point A (please check all that apply) LRAS Price Level LX AD₁ AD₂ AS Fed Sale of Bonds Quantity of Output Consumer Confidence Falls An increase in taxes A technological Advance The US $ Appreciating Foreign Incomes Rising An increase in government expenditures Business Optimism Rises An oil embargo Lowering of the Fed Funds Rate

The Economy is at Point B today after being at Point A for the past 5 years. Which of the following could cause the Economy to return to Point A (please check all that apply) LRAS Price Level LX AD₁ AD₂ AS Fed Sale of Bonds Quantity of Output Consumer Confidence Falls An increase in taxes A technological Advance The US $ Appreciating Foreign Incomes Rising An increase in government expenditures Business Optimism Rises An oil embargo Lowering of the Fed Funds Rate

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 3TY

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Congratulationst You have been appointed an economic policy adviser to the United States, You are told that the economy is significantly abowe futtemplyoment GDP. Based on this inlormation, how can the economy would adjust to reach LR.SR Equilbrium (Classical View)? The economy wilt experience low unemployment rate, pushing wages up, and increasing the pelces of a key input (labor). shatting the sAS to the left (up). The economy will experience high unemployment rate, pushing wages down, and reducing the prices of a key input (labor). shiting the SAS to the right (down). The econoriny wil experience low unemployment rate, decreasing inceme, which will eventually shift the AD to the left. The eooncmy will experience low unemployment rate, pushing wages up, and increasing the prices of a key input (labor), shiting the sAs to the night (down).
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