Version B Figure 2 LRAS LRAS2 SRAS SRASA AD2 AD Real GDP 17, Refer to Figure 2.

Question

Version B Figure 2 LRAS LRAS2 SRAS SRASA AD2 AD Real GDP 17, Refer to Figure 2. If the economy is initially at point B and new technology leads to an increase in we will end up at point .. C. A to ADi? 18. Refer to Figure 2. Which of the following would cause the sggregate denand curve to shift from AD The economy has been producing more than its full-employment output level and a. wages and input prices begin to rise. b. There is a redaction in consamer confidence about future growth in the ecomomy c· There is a reduction in income tax rates. d. There is an increase in the price of oil. e. There is an increase in the seneral price level that reduces real wealth. . government outlays have risen quickly since 2000. 19. Due to a. b. c. d. e. less tax revenue increased government borrowing lower interest payments on current government debt an aging population economic expansion 20. The "crowding-out" critique is based on the idea that a. increases in government spending and decreases in taxes are offset by increases in savings b. supply-side fiscal policy does not increase total output. c. consumption increases when government spending increases. d. government spending may be a substitute for private spending. e. time lags crowd out the effects of fiscal policy Page 4 /11

Explanation / Answer

ans 17. option e is correct

ans 18. option a is correct

ans 19. option d is correct

ans 20. option d is correct

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