20) Crowding out, following an increase in govemment spending foreign exchange price of the domestic currency A) lower interest rates and a higher exchange rate. B) lower interest rates and a lower exchange rate. C) higher interest rates and a lower exchange rate. D) higher interest rates and a higher exchange rate resuls from (the exchange rate is the 20 7) Refer to Figure 24-3. Which of the points in the above graph are possible short-run equilibria? A) A and D B) A and B C) Aand C D) A, B, C, and D 8) Refer to Figure 24-3. Which of the points in the above graph are possible long-run equilbria? 8) A) A and C B) B and D C) C and D D) A and B 9) Refer to Figure 24-3. Suppose the economy is at point A. If government spending increases in the economy, where will the eventual long-run equilibrium be? 9) D) D 10) Stagflation is often a result of A) a decrease in aggregate demand C) a negative supply shock 10) B) an increase in aggregate supply D) an increase in aggregate demand ) Starting from long-run equilibrium, use the basic aggregate demand and aggregate onwn and the short nun when there - increase in wealth