ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Economics

Use the AD/AS model below to answer the following questions. In each case, assume the economy starts in long- and short-run
equilibrium.
Price Level (base = 100)
100.0
The Macroeconomy
in long- and short-run equilibrium
LRAS
AD₁
SRAS₁
C
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Transcribed Image Text:Use the AD/AS model below to answer the following questions. In each case, assume the economy starts in long- and short-run equilibrium. Price Level (base = 100) 100.0 The Macroeconomy in long- and short-run equilibrium LRAS AD₁ SRAS₁ C
d. The problem associated with the government reacting to the record harvests by increasing taxes or decreasing spending is:
O the price level will increase.
the deficit will increase.
O unemployment will increase.
O the inflation rate will increase.
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Transcribed Image Text:d. The problem associated with the government reacting to the record harvests by increasing taxes or decreasing spending is: O the price level will increase. the deficit will increase. O unemployment will increase. O the inflation rate will increase.
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