Question 24 Figure $$ 10-13 $$ $$ 856 d d 8 d b-2 d 7 d-48 b 0-8755-b 90 b 1118 b \mathrm{fl} $$ PNG In Figure $$ 10-13 $$, which of the following would most likely cause the movement from point $$ e_{2} $$ to point $$ E_{2} $$ ? (1) an increase in aggregate demand (2) higher wages and resource prices (3) a technological advance 4) lower interest rates

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**Step 1. Identify the Diagram Characteristics**

In the context of macroeconomics, Figure $$10-13$$ is typically an aggregate demand (AD) and aggregate supply (AS) diagram. In such diagrams, movements from one equilibrium point to another (here, from $$e_2$$ to $$E_2$$) are usually the result of changes in either aggregate demand or aggregate supply.

**Step 2. Analyze the Potential Causes**

- **(1) An increase in aggregate demand:**  
  When aggregate demand increases, the AD curve shifts to the right. This shift causes the equilibrium to move from an initial point (here, $$e_2$$) to a new equilibrium point (here, $$E_2$$) with a higher price level and a higher output level.

- **(2) Higher wages and resource prices:**  
  These factors increase production costs and would shift the short-run aggregate supply curve to the left. This scenario would lead to a higher price level but lower output, which is not consistent with a movement from $$e_2$$ to $$E_2$$ where we expect both to rise.

- **(3) A technological advance:**  
  A technological advancement increases productivity and shifts the long-run aggregate supply curve outwards, increasing potential output. Although this increases capacity, the usual immediate effect in the diagram would be a shift of the LRAS curve rather than a movement along the existing curves.

- **(4) Lower interest rates:**  
  Lower interest rates tend to boost consumption and investment expenditure, leading to an increase in aggregate demand. This mechanism is similar to the effect of an increase in aggregate demand (option 1), but it identifies the policy tool rather than the overall shifting factor.

**Step 3. Determine the Most Likely Cause for the Movement from $$ e_2 $$ to $$ E_2 $$**

Since the movement is characterized by a new equilibrium attained due to increased spending in the economy, the primary explanation is an increase in aggregate demand. Although lower interest rates (option 4) can lead to such an effect, the most direct answer to the question is the overall increase in aggregate demand.

**Conclusion**

The movement from point $$ e_{2} $$ to point $$ E_{2} $$ is most likely caused by

$$
\boxed{\text{(1) an increase in aggregate demand}}
$$
The movement from $$ e_{2} $$ to $$ E_{2} $$ is most likely caused by an increase in aggregate demand.

Question 24
Figure
PNG
In Figure , which of the following would most likely cause the movement from point to point ?
(1) an increase in aggregate demand
(2) higher wages and resource prices
(3) a technological advance
4) lower interest rates

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Question 24 Figure PNG In Figure , which of the following would most likely cause the movement from point to point ? (1) an increase in aggregate demand (2) higher wages and resource prices (3) a technological advance 4) lower interest rates