Economics (AS & A Level) · May / June 2024 · Paper 13 · Question 15

The diagrams show a country's aggregate demand (AD1) and aggregate supply (AS1) curves. Since the world economic downturn (2007–2008), some governments have reduced labour costs and ensured interest rates remained unchanged. How would this most likely be shown on a diagram?

1. ADiagram A: AS shifts right from AS1 to AS2, AD1 unchanged, price level falls from P1 to P2
2. BDiagram B: AD shifts left from AD1 to AD2, AS1 unchanged, price level falls from P1 to P2
3. CDiagram C: AS shifts left from AS1 to AS2, AD1 unchanged, price level rises from P1 to P2
4. DDiagram D: AD shifts right from AD1 to AD2, AS1 unchanged, price level rises from P1 to P2

As printed in the paper