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Question: 1 consider an economy at full employment if consumers and...

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1. Consider an economy at full employment. If consumers and firms become less optimistic about the future economy then

a) price levels will rise.

b) output will rise.

c) unemployment will rise.

2. A ________ in an AD/AS diagram could explain a decrease in cyclical unemployment.

a) shift in AS to the left

b) shift in AD to the right

c) shift in AS to the right

3. An AD/AS model showing equilibrium in the steep section of the aggregate supply curve suggests

a) the economy is in recession.

b) potential GDP is being exceeded.

c) potential GDP is being met.

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