Refer to the information provided in Figure 26.8 below to answer ...

[Themember4]

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

[catron30]

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[Themember4]

Excellent

[tranoy]

Thanks for the timely response, appreciate it