Figure 9.2

-Refer to Figure 9.2. A movement from point d to point c could be caused by a(n)
A) increase in government spending.
B) increase in the price of oil.
C) increase in taxes.
D) increase in short-run aggregate supply.

Question

Figure 9.2
 
-Refer to Figure 9.2. A movement from point d to point c could be caused by a(n)
A) increase in government spending. 
B) increase in the price of oil. 
C) increase in taxes. 
D) increase in short-run aggregate supply.

Quizplus · Accepted Answer

The movement from point d to point c implies a decrease in output and an increase in price level, which could be caused by an increase in the price of oil. This would increase production costs for firms, leading to a decrease in short-run aggregate supply and a shift to the left in the SRAS curve, resulting in a decrease in output and an increase in price level. Increases in government spending or taxes would have a direct impact on aggregate demand and would shift the AD curve, resulting in movements along the SRAS curve. An increase in short-run aggregate supply would shift the SRAS curve to the right, resulting in an increase in output and decrease in price level.

Figure 9.2 -Refer to Figure 9.2. a Movement from Point D to from Point