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

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Question 20

The table below shows potential macroeconomic events causing shifts in the aggregate demand (ADADAD), short-run aggregate supply (SRASSRASSRAS), and long-run aggregate supply (LRASLRASLRAS) curves for an open economy.

AD AD\,AD shifts to the leftSRAS SRAS\,SRAS shifts to the rightLRAS LRAS\,LRAS shifts to the right
AThe government increases its spending on infrastructureGlobal commodity prices fallThe state pension age is lowered
BThe domestic exchange rate appreciatesEmployers' National Insurance contributions are reducedGovernment spending on vocational training increases
CThe central bank lowers the base interest rateThe corporate income tax rate is increasedNet migration of working-age adults becomes negative
DConsumer confidence index rises significantlyBusiness energy subsidies are abolishedBusiness investment in new capital machinery increases

All other things being equal, which combination, A, B, C or D, is correct?

Option A

Option B

Option C

Option D

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

  1. A Level
  2. /Economics
  3. /2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts