eco

1.

(1) 1 3 2 4

(2) 2 1 3 4

(3) 1 3 4 2

(4) 4 3 2 1

(5) 1, 4 1, 3 2, 4 2, 3

(6) 2, 4 1, 4 2, 3 1, 3

(7) 2 1 1, 3 2, 4

4 2, 3 3 1, 4

    Real GDP

P ric

e le

ve l

Y1

P1 A

Y2

P2 B

LRAS

AD

Real GDP

P ric

e le

ve l

Y1

P1 A

Y2

P2 B

LRAS

AD

    Real GDP

P ric

e le

ve l

Y1

P1 A

Y2

P2 B

LRAS

Real GDP

P ric

e le

ve l

Y1

P1 A

Y2

P2 B

LRAS

a. Match the following scenarios to the appropriate graph.

i. An increase in the expected price level

(1)

ii. An increase in households' expectations of their future income

(2)

iii. A decrease in the price of an important natural resource

(3)

iv. A decrease in firms' expectations of the future profitability of investment spending

(4)

b. Match one or more of the four graphs to each of the following scenarios:

i. The economy experiences a recession (5)

ii. The economy experiences short-term inflation (6)

iii. The economy experiences stagflation (7)

1

SRAS2 SRAS1

2

SRAS2

SRAS1

3

SRAS

AD1 AD2

4

SRAS

AD1

AD2