Multi choice question help

Question 2 : choice A is the most reasonable one as supply side policy acts like expansionary fiscal policy & monetary policy but it stimulates the economy in the long term. The long run supply curve will shift to the right so the price level declines which mean income/output rises without creating inflationary pressure. Also on the solution page the answer is A not B.

Question 6 : deflation is opposite to inflation so people will have less purchasing power and will be less willing to spend on goods & services soonly choice A makes sense.

Question 11 : again fiscal expansion is used in the short term period so B is incorrect (that would have to be boosted by shift in long run supply) and used with negative output gap (not positive so not A) when unemployment rises more than natural rate due to the cyclical one so choice D is the only correct one.

Question 12 : income fallen with rising unemployment means there has been a decline in inflation and people tend to spend less on goods and services so the expenditures decrease and so does the deficit on current account.

Question 14 : I’m not quite sure about it as well as I thought they meant the multiplier effect which A is should be the one that explains this when a change in autonomous spending leads to greater change in income.

Question 17 : no idea as well sorry

Question 21 : 500 + 400 - 800 - 300 + 50 + 100 = (-50)

Question 22 : moving the long term equilibrium to point G rather than F means the LRAS has to shift to the right as well. Only D is one of the ways to improve productive capacity to shift LRAS and also raise the potential GDP . For choice A the equilibrium will be at G for a short term and will gradually move to F as the potential GDP is unchanged so it has to adjust itself by moving back to trend GDP with higher level of inflation instead.

Hope this is helpful and can clarify at least some points

Thank you ever so much. Your explanations helped me understand the ones you explained very well and sometimes it's just the wording of the question that I misread. Thanks!

Thank you ever so much. Your explanations helped me understand the ones you explained very well and sometimes it's just the wording of the question that I misread. Thanks!

14 - B is the literal definition of the accelerator effect so learn that for the future. If you aren’t aware of the accelerator effect, you can look at econplusdal video on YouTube or sites like tutor2u, it is pretty much the multiplier effect but all to do with investment. Pretty much with rises in national income (economic growth), firms increase their investment to match the growing demand and also if they anticipate further demand in the future.

17 - The answer is B because from 2012 to 2015, prices and average earnings went up year on year therefore they will obviously be higher by 2015. These questions are usually trick questions to try make sure you distinguish between disinflation and deflation. Even though inflation and average earnings growth fell, the growth was still positive meaning they have still increased. You can easily disprove the other 3 answers aswell, if you would like me to just do you know in the future just let me know.