Refer to the Information Provided in Figure 18

question 14

Multiple Choice

Refer to the information provided in Figure 18.1 below to answer the questions that follow.
Figure 18.1
-Refer to Figure 18.1.According to the new classical economists,under rational expectations an expected decrease in government spending would

• A)shift AS₁ to the right.
• B)shift AD₁ to the right.
• C)shift AD₁ to the left.
• D)not change AD and AS.

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Definitions:

Cartel

An association of independent businesses or countries agreeing to coordinate their production and pricing to monopolize a market or maximize profits.

Cutthroat Competition

Cutthroat competition describes an extremely competitive market situation where participants engage in aggressive price-cutting and other practices to gain market share.

Collusion

A secret or illegal cooperation or conspiracy, especially between parties to deceive or defraud others.

Barriers to Entry

Obstacles that make it difficult to enter a given market, potentially including high startup costs, strict regulations, or strong competition.