Suppose that there is a temporary, but significant increase in oil prices in the economy depicted in the figure to the right. a. Using the 3-point curved line drawing tool, show the impact the elevated oil prices have on the macroeconomy. Properly label this line. Carefully follow the instructions above and only draw the required objects. b. If the policymakers wish to prevent the equilibrium real GDP from changing in response to the oil price increase, it should OA. decrease the quantity of money in circulation in order to shift the short-run aggregate supply curve rightward. OB. decrease the quantity of money in circulation in order to shift aggregate demand leftward. OC. increase the quantity of money in circulation in order to shift aggregate demand rightward. OD. decrease the quantity of money in circulation so that oil prices will fall.
Suppose that there is a temporary, but significant increase in oil prices in the economy depicted in the figure to the right. a. Using the 3-point curved line drawing tool, show the impact the elevated oil prices have on the macroeconomy. Properly label this line. Carefully follow the instructions above and only draw the required objects. b. If the policymakers wish to prevent the equilibrium real GDP from changing in response to the oil price increase, it should OA. decrease the quantity of money in circulation in order to shift the short-run aggregate supply curve rightward. OB. decrease the quantity of money in circulation in order to shift aggregate demand leftward. OC. increase the quantity of money in circulation in order to shift aggregate demand rightward. OD. decrease the quantity of money in circulation so that oil prices will fall.
Chapter22: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
Problem 12P
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