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 left | SRAS SRAS\,SRAS shifts to the right | LRAS LRAS\,LRAS shifts to the right | |
|---|---|---|---|
| A | The government increases its spending on infrastructure | Global commodity prices fall | The state pension age is lowered |
| B | The domestic exchange rate appreciates | Employers' National Insurance contributions are reduced | Government spending on vocational training increases |
| C | The central bank lowers the base interest rate | The corporate income tax rate is increased | Net migration of working-age adults becomes negative |
| D | Consumer confidence index rises significantly | Business energy subsidies are abolished | Business 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
222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.