An 'economic contraction' begins with a/an ________ in spending by firms on capital goods and a/an ________ in spending on durable goods by households.

Group of answer choices

increase; decrease

increase; increase

decrease; increase

decrease; decrease

The impact of a natural disaster on consumers in the economy can make them very pessimistic about their future incomes. How would an increase in pessimism affect the aggregate demand curve?

Group of answer choices

This will move the economy up along a stationary aggregate demand curve.

This will move the economy down along a stationary aggregate demand curve.

This will shift the aggregate demand curve to the left.

This will shift the aggregate demand curve to the right.

Suppose a developing country receives more machinery and capital equipment as foreign entrepreneurs increase the amount of investment in the economy. As a result, the

Group of answer choices

long-run aggregate supply curve will shift to the right.

long-run aggregate supply curve will shift to the left.

economy will move up along the long-run aggregate supply curve.

economy will move down along the long-run aggregate supply curve.

Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?

Group of answer choices

output will increase

prices will decline

unemployment will decline

aggregate supply will shift to the left

Refer toFigure 15.1for the following questions.

Figure 15.1

InFigure 15.1, which of the points are possible long-run equilibriums?

Group of answer choices

A and B

A and C

A and D

B and D

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