A. The exchange-rate effect
B. The wealth effect
C. The classical dichotomy/monetary neutrality effect
D. The interest-rate effect
A. lower prices increase money holdings decrease lending interest rates rise, and investment spending falls
B. lower prices increase the value of money holding and consumer spending increases
C. lower prices decrease the value of money holdings and consumers spending decreases
D. lower prices reduce money holdings increase lending interest rates fall, and investment spending increase
A. fail to respond to the adverse supply shock and allow the economy to adjust on its own.
B. respond to the adverse supply shock by decreasing aggregate demand which lower prices
C. respond to the adverse supply shock by decreasing short run aggregate supply
D. respond to the adverse supply shock by increasing aggregate demand, which further raises prices
A. People will reduce their price expectations and the short run aggregate supply will shift right
B. People will raise their price expectations and aggregate demand will shift left
C. People will raise their price expectations and the short run aggregate supply will shift left
D. People will reduce their price expectations and aggregate demand will shift right
A. a decrease in the money supply
B. a drop-in oil prices
C. an increase in government spending on military equipment
D. None of these answers
E. an increase in price expectations
A. Output rises; prices are unchanged from the initial value
B. Output and the price level are unchanged from their initial values
C. Output falls; prices are unchanged from the initial value
D. Prices fall; output is unchanged from its initial value
A. Output falls; prices are unchanged from the initial value
B. Price fall; output is unchanged from its initial value
C. Output and the price level are unchanged from their initial values
D. Prices rise; output is unchanged from its initial value
A. misperceptions theory of the short run aggregate supply curve
B. classical dichotomy theory of the short run aggregate supply curve
C. sticky price theory of the short run aggregate supply curve
D. sticky wage theory of the short run aggregate supply curve
A. When the economy is at the natural rate of unemployment
B. When the economy is at the natural rate of investment
C. When the economy is at the natural rate of aggregate demand
D. When there is no no unemployment
A. Is vertical because an equal change in all prices and wages leaves output unaffected
B. is positively sloped because price expectations and wages tend to be fixed is the long run
C. shifts right when the government raises the minimum wage
D. shifts left when the natural rate of unemployment falls