According to the model of aggregate supply and aggregate demand in the long run an increase in the money supply should cause ? A. Prices to rise and output to rise B. Price to fall and output to remain unchanged…
Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers wished to move output to its long run natural rate they should attempt to ? A. Shift aggregate…
Stagflation occurs when the economy experiences ? A. rising prices and rising outputB. rising prices and falling output C. falling prices and falling output D. falling prices and rising output
Suppose the economy is initially is long run equilibrium Then suppose there is a drought that destroys much of the wheat crop According to the model of aggregate demand and aggregate supply, what happens of prices and output in the…
Suppose the economy is initially in long-run equilibrium Then suppose there is an increase in military spending due to rising international tensions According to the model of aggregate demand and aggregate supply what happens to prices and output in the…
Suppose the price level falls but because of fixed nominal wage contracts the real wage rises and firms cut back on production This is a demonstration of the ? A. sticky-wage theory of the short-run aggregate supply curve B. classical…
According to the wealth effect aggregate demand slopes downward (negatively) because ? A. lower prices increase the value of money holding and consumers spending increase B. lower prices decrease the value of money holding and consumers spending decrease C. lower…
Which of the following is not a reason why the aggregate demand curve slopes downward ? A. The exchange-rate effect B. The wealth effectC. The classical dichotomy/monetary neutrality effect D. The interest-rate effect
According to the interest rate effect aggregate demand slopes downward (negatively) because ? 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…
Policy makers are said to “accommodate” an adverse supply shock if they ? 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…