Figure 7-1 -Refer to Figure 7-1. What Could Have Caused the Aggregate

question 155

Multiple Choice

Figure 7-1
-Refer to Figure 7-1. What could have caused the aggregate demand curve to shift to the right from AD₁ to AD₂?

• A) An increase in exports
• B) An increase in imports
• C) A decrease in defense spending
• D) An increase in the domestic price level

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Definitions:

Monetarists

Economists who believe that variations in the money supply have major influences on national output in the short run and the price level over longer periods, as well as on inflation.

Money Supply

The overall quantity of currency and other liquid instruments circulating in an economy at a particular time.

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Supply-Side Economics

An economic theory that advocates for lower taxes and deregulation to stimulate production and economic growth.