Exhibit 20A-2 Macro AD/AS Models

question 1

Multiple Choice

Exhibit 20A-2 Macro AD/AS Models

-In Panel (b) of Exhibit 20A-2,a Keynesian expansionary stabilization policy designed to move the economy from Y₁ to Yp would attempt to shift the:

• A) aggregate demand curve (A
• D) leftward.
• B) SRAS curve leftward.
• C) aggregate demand curve (A
• D) rightward.
• D) LRAS curve rightward.

---

Definitions:

Long-Run Equilibrium

A state in which all factors of production can be adjusted, markets clear, and no economic agents have the incentive to change their behavior.

Marginal Revenue

The additional income that a business receives from selling one more unit of a good or service.

Economic Profits

The difference between total revenues and total costs, including both explicit and implicit costs.

Short-Run Equilibrium

A state in which market supply and demand balance out at current prices, leading to an economic situation where no incentive exists for prices to change.