Question 1
Refer to the information provided in Figure 26.8 below to answer the question(s) that follow.
Refer to Figure 26.8. For this economy to produce
Y
1 and sustain it without inflation
◦ the price of oil must increase.
◦ the government must increase spending.
◦ the government must decrease spending.
◦ potential output must increase.
Question 2
Refer to the information provided in Figure 26.8 below to answer the question(s) that follow.
Refer to Figure 26.8. Suppose the economy is currently at Point
A producing potential output
Y
0. If the government decreases spending, the economy moves to Point ________ in the short run and to Point ________ in the long run.
◦
D;
E◦
B;
C◦
C;
B◦
B;
D
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Hi i really need help clarifying this question T^T