Figure 17-1 -Refer to Figure 17-1. During the Great Depression, Aggregate Demand

question 64

Multiple Choice

Figure 17-1
-Refer to Figure 17-1. During the Great Depression, aggregate demand declined sharply. Suppose the economy moved to a short-run equilibrium at point k. Over time, the economy moved to point j. What could have caused the economy to move to point j?

• A) Falling output prices caused the aggregate supply to shift from SRAS₁ to SRAS₂.
• B) Falling nominal wages caused the aggregate supply to shift from SRAS₁ to SRAS₂.
• C) Expansionary fiscal policies caused the aggregate supply to shift from SRAS₁ to SRAS₂.
• D) A decline in the demand for U.S. goods by foreign countries aggregate supply to shift from SRAS₁ to SRAS₂.

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