Question

The U.S. experience of strong economic growth, full employment, and price stability in the late 1990s and early 2000s can be explained by a a. rightward shift of aggregate demand and a rightward shift of aggregate supply. b. rightward shift of aggregate demand and a leftward shift of aggregate supply. c. leftward shift of aggregate demand and a leftward shift of aggregate supply. d. leftward shift of aggregate demand and a rightward shift of aggregate supply.

Answer 1

Answer:

b. rightward shift of aggregate demand and a leftward shift of aggregate supply.

Explanation:

The U.S. experience of strong economic growth, full employment, and price stability in the late 1990s and early 2000s can be explained by a rightward shift of aggregate demand and a leftward shift of aggregate supply.

The rightward shift of aggregate demand is as a result of strong economic growth and price stability.

Answer 2

Answer:

a. rightward shift of aggregate demand and a rightward shift of aggregate supply.

Explanation:

Aggregate demand is the sum of four components which are consumption spending on goods and services, investment, government spending on public services, and net exports (difference between exports and imports). A shift to the right of the average demand curve signifies a strong economic growth. An increase in consumer spending can cause the average demand curve to shift to the right,

Productivity growth causes shift in the average supply curve.  Positive economic growth is therefore represented by a shift to the right of aggregate supply.