Question

Which of the curves in the aggregate demand and aggregate supply model is vertical?

		The long run aggregate supply
		The short run aggregate supply
		The demand
		The money supply

When the U.S. imposes tariffs__________?

	A.	The U.S. producer surplus increases by more than the US consumer surplus increases.
	B.	The U.S. producer surplus increases by more than the US consumer surplus decreases.
	C.	The U.S. producer surplus increases by less than the US consumer surplus increases.
	D.	The U.S. producer surplus increases by less than the US consumer surplus decreases.

Answer 1

Answer)

1) The long run aggregate supply curve and the money supply are vertical in the AD and AS model.

2) When US imposes tariffs, it protect its domestic producers from competition from abroad. The consumer will be worse off due to the restriction imposed on imports and the producers will be better off. So, the increase in US producer surplus is more than the US consumer surplus decreases.

So, option B is the correct option.

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