2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

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Question 1

Medium

In the diagram below, an economy is initially in equilibrium at point A. Aggregate demand then shifts from $AD_1\,$ to $AD_2\,$ and the short-run aggregate supply curve shifts from $SRAS_1\,$ to $SRAS_2$ .

AD/AS Diagram showing shifts in AD and SRAS

Which one of the following combinations of events will cause these shifts in AD and SRAS, moving the economy to a new equilibrium at point B?

A rise in domestic interest rates and an increase in labor productivity

An increase in income tax rates and a fall in nominal wages

A depreciation of the exchange rate and a rise in global raw material prices

A rise in government spending and a fall in the price of imported components

2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

Question 1

2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts Questions

2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

Question 1

2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts Questions