In the AD-AS model, an increase in regulation of industries would cause Aggregat
ID: 1209993 • Letter: I
Question
In the AD-AS model, an increase in regulation of industries would cause Aggregate: Supply to shift leftward Demand to shift rightward Demand to shift leftward Supply to shift rightward In the AD-AS model, a political decision to reduce government expenditure will shift the Aggregate: Supply to shift leftward Demand to shift rightward Demand to shift leftward Supply to shift rightward Refer to the diagram below. This economy is experiencing a(n)_____and real GDP (output)_____potential/natural level of real GDP (output) at P^*,Y^* Recessionary gap; less than Recessionary gap; greater than Inflationary gap; less than Inflationary gap; greater thanExplanation / Answer
Answer 3:
Increase in the regulation of industries will cause AS curve to shift leftwards. As compliance with the new laws will may hamper the production of the industries. Thus, Option A.
Answer 4;
Option C. Government expenditure is a component of the aggregate demand of the economy. Decline in government spending will reduce the aggregate demand in the economy.
Answer 5:
Option A. As the equilibrium output is below the potential level of the GDP, the economy is experiencing recessionary gap.