Refer to the information provided in Figure 26.6 below to answer the question(s) that follow. Figure 26.6
-Refer to Figure 26.6. Suppose the equilibrium output is initially $600 billion. A decrease in the Z factors ________ equilibrium output and ________ the price level.
A) decreases; leaves unchanged
B) leaves unchanged; increases
C) increases; increases
D) increases; decreases

Question

Refer to the information provided in Figure 26.6 below to answer the question(s) that follow.  Figure 26.6
-Refer to Figure 26.6. Suppose the equilibrium output is initially $600 billion. A decrease in the Z factors ________ equilibrium output and ________ the price level.
A) decreases; leaves unchanged 
B) leaves unchanged; increases 
C) increases; increases 
D) increases; decreases

Quizplus · Accepted Answer

A decrease in the Z factors, which typically represent factors like taxes, regulations, or other external influences, can lead to an increase in aggregate demand. This increase in demand can result in a higher equilibrium output and a higher price level as the economy moves to a new equilibrium point.

Refer to the Information Provided in Figure 26