Question 1
Refer to the information provided in Figure 26.6 below to answer the question(s) that follow.
Refer to Figure 26.6. Suppose the equilibrium output is initially $600 billion. A decrease in wages and an increase in government spending will, for sure, increase
◦ both the equilibrium output and the price level.
◦ the price level.
◦ equilibrium output.
◦ equilibrium output and decrease the price level.
Question 2
Refer to the information provided in Figure 26.6 below to answer the question(s) that follow.
Refer to Figure 26.6. Suppose the equilibrium price level is 110. An increase in the
Z factors ________ equilibrium output and ________ the price level.
◦ decreases; leaves unchanged
◦ leaves unchanged; increases
◦ increases; increases
◦ decreases; decreases