Question

GIVE ONLY ANSWERS AND ANSWER ALL

130 120 100 90 o 15.0 155 16.0 165 170 175 Real GDP (trillions of 2009 dollars) 24) 24) In the above figure, the curve labeled A shifts rightward f B) the quantity of money decreases. D) the substitution effect occurs. A) expected future profits decrease C) taxes decrease. 25) 25) In the United States, of the following decades inflation was highest during the- - D) 2000s C) 1990s A) 1960s B) 1970s 26) If aggregate demand decreases and neither short-run nor long-run aggregate supply changes, then 26) A) there is a recessionary gap. B) the price level increases in the short-run and decreases in the long run. C) there is an inflationary gap. D) in the long run, the long-run aggregate supply will decrease.

Answer 1

24. The aggregate demand curve shifts to the right when there is a tax decrease, the tax decrease increases the disposable income and there by increases the consumption and the aggregate demand.

Ans: a) Taxes decrease.

25. In the U.S there was high rates of inflation and the unemployment in the 1970's,

Ans: 1970's

26. If the aggregate demand curve decreases and the curve would shift , the real GDP will fall short of the full employment level of GDP.

Ans; Recessionary gap.

27. Only the real factors can influence the long run supply of the economy, here the technological progress would shift the long run aggregate supply to the right.

Ans: Technology increases.

28. This illustrates a recessionary gap, a recessionary gap occurs when the current real GDP falls short of the full employment level of GDP.

Ans: Recessionary gap.

29. A).