Which of the Following Would Be the Theoretical Outcome of Expansionary

question 64

Multiple Choice

Which of the following would be the theoretical outcome of expansionary fiscal policy in the following aggregate demand-aggregate supply model?

• A) The aggregate demand (A
• D)curve would shift from AD₁ to AD₂.
• B) The short-run aggregate supply (SRA
• S)curve would shift from SRAS₂ to SRAS₁.
• C) The short-run aggregate supply (SRA
• S)curve would shift from SRAS₁ to SRAS₂.
• D) The aggregate demand (A
• D)curve would shift from AD₁ to AD₂ at the same time that the SRAS curve would shift from SRAS₁ to SRAS₂.
• E) The aggregate demand (A
• D)curve would shift from AD₂ to AD₁.

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Definitions:

Market System

Investment, production, and distribution closely follow supply and demand directives in this economic system, which allows for the free fluctuation of goods and services prices within an unrestricted price system.

Total Revenues

The overall income received by a firm from selling its goods or services, calculated as the price of the good multiplied by the quantity sold.

Total Costs

The sum of all costs associated with producing a good or service, including both fixed and variable costs.

Industry Expansion

The growth or increase in size and operations of an industry due to higher demand, technological advancements, or other factors.