Which of the following would be most likely to have a negative effect on the goals of economic prosperity, price stability and full employment?

Question

BlackTom AI · Accepted Answer

A leftward shift in aggregate supply raises the price level while lowering real GDP and increasing unemployment, so it directly undermines prosperity, price stability, and full employment. 1. Relevant knowledge points and concepts - Aggregate supply (AS): total production firms are willing to supply at each price level. A decrease in AS = leftward shift. - Aggregate demand (AD): total spending at each price level. Changes shift equilibrium price level (P) and real output (Y). - Policy goals: economic prosperity (higher real GDP), price stability (low and stable inflation), full employment (low unemployment). 2. Step‑by‑step reasoning - Start at initial equilibrium (Y0, P0) where AS intersects AD. - If AS decreases (shifts left to AS1), at the same AD the new intersection is at (Y1, P1) with Y1 < Y0 and P1 > P0. - Lower real GDP (Y1) means less production and income → reduced economic prosperity. - Higher price level (P1) = inflationary pressure → loss of price stability. - Lower output typically means firms cut labor → unemployment rises → move away from full employment. 3. Intermediate steps (conceptual “calculations”) - AS shift: AS0 → AS1 (left). - Resulting changes: ΔY = Y1 − Y0 < 0 (output falls), ΔP = P1 − P0 > 0 (prices rise), ΔU > 0 (unemployment rises). 4. Why this answer is correct - A decrease in AS simultaneously produces inflation and recession (“stagflation”), harming all three goals at once. That combination is particularly damaging because policy tradeoffs become difficult. 5. Why the other options are incorrect - b. Decrease in AD: lowers Y and raises unemployment (bad for prosperity and employment) but lowers P (deflationary), so it does not simultaneously harm price stability in the same inflationary way. - c. Increase in AS: raises Y, lowers P, and reduces unemployment — improves the goals. - d. Increase in AD: raises Y and lowers unemployment (good for prosperity/employment) but raises P (inflationary), so it does not harm all three simultaneously. 6. Conclusion The most damaging choice is a. A decrease in aggregate supply, which matches the provided answer.

Which of the following would be most likely to have a negative effect on the goals of economic prosperity, price stability and full employment?单项选择题

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Which of the following would be most likely to have a negative effect on the goals of economic prosperity, price stability and full employment?单项选择题

类似问题

Which of the following factors would be most likely to lead to an increase in aggregate supply (AS) for an economy?

An economy experiences a decrease in the unemployment rate, an increase in economic growth, and a decrease in the inflation rate. Which of the following is the best explanation for this?

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An economy experiences a decrease in the unemployment rate, an increase in economic growth, and a decrease in the inflation rate. Which of the following is the best explanation for this?

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In response to a positive one-time oil price shock, the U.S. economy would initially experience a ______. Next, as soon as the oil price shock ends, it would ______ by way of ______.

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希望你的学习变得更简单

In response to a positive one-time oil price shock, the U.S. economy would initially experience a . Next, as soon as the oil price shock ends, it would by way of __.