Question 1
Refer to the information provided in Figure 26.8 below to answer the question(s) that follow.


Refer to Figure 26.8. If the economy is currently at Point
B producing output level
Y
1
◦ the economy is operating above full employment.
◦ input prices are likely to rise.
◦ aggregate supply shifts to the left and the economy ends up at Point
C.
◦ All of these.
Question 2
Refer to the information provided in Figure 26.8 below to answer the question(s) that follow.


Refer to Figure 26.8. If the economy is at Point
A currently producing
Y
0 and the
Z factors decrease, the economy will move to Point ________ in the short run and to Point ________ in the long run.
◦
B;
C◦
D;
E◦
E;
D◦
C;
B