ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The increase in the price of oil immediately shifted the AS curve to the left.
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The financial crisis did not take hold right away so the AD curve did not immediately shift.
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Eventually, the Lehman Brothers bankruptcy caused a negative demand shock leading to a further fall in output and an increase in the unemployment rate.
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All of the above are true.
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Detailed explanation-1: -The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is true of the United Kingdomʹs experience? The increase in the price of oil immediately shifted the AS curve to the left.
Detailed explanation-2: -The expectations-augmented Phillips curve assumes that if actual inflation rises, expected inflation will also increase, and the Phillips curve will move upwards so as to give the same expected real wage increase at each employment level.
Detailed explanation-3: -Explanation: The macro-level of economics refers to the study of economic factors as a whole. The unemployment rate, price level, and overall productivity are the macro outcomes.
Detailed explanation-4: -A supply shock is an unexpected event that changes the supply of a product or commodity, resulting in a sudden change in price. A positive supply shock increases output, causing prices to decrease, while a negative supply shock decreases output, causing prices to increase.
Detailed explanation-5: -The aggregate supply curve shifts to the left as the price of key inputs rises, making a combination of lower output, higher unemployment, and higher inflation possible.