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Economic management — Question 5

QCAA 2021, Paper 1 · 1 mark

Q5 · 2021 · External assessmentUnclassified1 mark

QUESTION 5

Assume the Australian Government has simplified regulations in the medical and pharmaceutical industries.

Identify the expected change to the aggregate demand/aggregate supply diagram (ceteris paribus).

(A) Average prices rise and GDP decreases because the aggregate supply curve shifts to the left.

(B) Average prices fall and GDP increases because the aggregate supply curve shifts to the right.

(C) Average prices rise and GDP increases due to an expansionary movement along the aggregate supply curve.

(D) Average prices fall and GDP decreases due to a contractionary movement along the aggregate supply curve.

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