Select from Figures 8–2 through 8–5 the figure that best reflects each of the following events:
Event A:Workers cut wages and businesses cut prices. The falling prices encourage consumers to buy more.
Event B:An improved world economy increases the demand by the rest of the world for U.S. exports.
Event C:Higher taxes cause business firms to cut back on output, leading to higher prices.
Event D:Falling stock market prices reduce the wealth of Americans.
As a result, they spend less.

Figure 8-2:

Figure 8-3:

Figure 8-4:

Figure 8-5:

Transcribed Image Text:

P (price level) AD AD 1 (equilibrium) R S Q (real output) AS (aggregate supply- short run) AD' (aggregate demand- new curve) AD (aggregate demand- old curve)