Suppose the Economy Is Initially in Equilibrium at Point a in the Figure

question 87

Essay

Suppose the economy is initially in equilibrium at point A in the figure below. A decrease in investment expenditures causes the AD curve to shift back to AD₂. Under these circumstances, which of the following statements is true?
a.
If the countercyclical fiscal policy is made at the correct time, the AD curve will shift to AD₄.
b.
If there is no countercyclical fiscal policy, the AD curve will shift to AD₄.
c.
If there is no countercyclical fiscal policy, the AD curve will shift back to AD₁.
d.
If the countercyclical fiscal policy is timely enough, the AD curve will shift to AD₃.
e.
If there is no countercyclical fiscal policy, the IA line will shift up.

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Definitions:

Work Centres

Specific locations, machines, or groups of machines within a manufacturing facility where distinct types of processes are performed.

Assignment Method

The assignment method is a mathematical technique used for allocating resources or tasks to units in an efficient manner, often used in operations research.

Job-Machine Combination

A matching process in operations management that involves assigning specific jobs to specific machines or workstations, optimizing for efficiency and output.

Optimal Assignments

The best possible allocation of tasks, resources, or personnel to jobs, projects, or roles based on specific criteria to maximize efficiency or outcome.