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Econ2105Test4 - Name Date Use the following to answer...

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Name: __________________________ Date: _____________ Use the following to answer questions 1-2: Figure: AD-AS Model 2 1. (Figure: AD-AS Model 2) As the size of the labor force increases over time, which of the following will take place? A) LRAS will shift to the right. B) LRAS will shift to the left. C) AD curve will shift to the left. D) AD curve will shift to the right. 2. (Figure: AD-AS Model 2) If the price level increases, which of the following will take place? 3. The short-run aggregate supply curve is positively sloped because: Page 1
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4. Which of the following represent the three consequences of the decline in demand during the Great Depression? 5. If there is an inflationary gap, which of the following accurately describes the adjustment to long-run equilibrium? A) Nominal wages decrease, and the aggregate demand curve shifts left until the economy reaches long-run equilibrium. B) Nominal wages increase, and the aggregate demand curve shifts right until the economy reaches long-run equilibrium. C) Nominal wages decrease, and the short-run aggregate supply curve shifts right until the economy reaches long-run equilibrium. D) Nominal wages increase, and the short-run aggregate supply curve shifts left until the economy reaches long-run equilibrium.
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