Figure 14.2
-Refer to Figure 14.2. A movement from point a to point c could be caused by a(n)
A) increase in government spending.
B) decrease in the price of oil.
C) increase in taxes.
D) increase in short-run aggregate supply.

Question

Figure 14.2
-Refer to Figure 14.2. A movement from point a to point c could be caused by a(n)
A) increase in government spending. 
B) decrease in the price of oil. 
C) increase in taxes. 
D) increase in short-run aggregate supply.

Quizplus · Accepted Answer

A movement from point a to point c represents an increase in real GDP and a decrease in price level. This could be caused by an increase in government spending, which would shift the aggregate demand curve to the right and result in a higher equilibrium level of output and price level. A decrease in the price of oil would shift the short-run aggregate supply curve to the right, resulting in a lower price level and higher output, which does not match the movement from a to c. An increase in taxes would decrease aggregate demand, shifting the AD curve to the left and resulting in lower output and price level, which does not match the movement from a to c. A movement from a to c could not be caused by an increase in short-run aggregate supply, as this would result in a lower price level and no change in output.

Figure 14.2 -Refer to Figure 14.2. a Movement from Point a to a to Point