Which of the following could explain why there is an increase in ...

[meagbuch]

Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP falls?
 
  A) AD did not shift and SRAS shifted to the left. B) AD shifted to the right by less than SRAS.
  C) SRAS shifted to the right by more than LRAS. D) AD shifted to the right by more than SRAS.

Question 2

Refer to Figure 29-1. Italians cut back on smoking and cut their demand for American cigarettes in half. Assuming all else remains constant, this would be represented as a movement from
 
  A) A to D. B) D to C. C) B to C. D) B to A.

[Kaytorgator]

Answer to Question 1

A

Answer to Question 2

D