According to the aggregate demand and aggregate supply model, in the long run an increase in the money supply leads to increases in both the price level and real GDP. an increase in real GDP but does not change the price level. an increase in the price level but does not change real GDP. no change in either the price level or real GDP.
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According to the aggregate
increases in both the
an increase in real GDP but does not change the price level.
an increase in the price level but does not change real GDP.
no change in either the price level or real GDP.
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- According to the model of aggregate demand and supply, in the long run an increase in the money supply would cause: a) Prices and outputs to fall b) Prices to fall and outputs to rise c) Prices to rise and outputs to fall d) Prices to rise and outputs to remain unchanged e) None of the aboveAn increase in the money supply will cause which of the following to occur? OPTIONS: a rightward shift of the aggregate supply curve a leftward shift of the aggregate demand curve a leftward shift of the aggregate supply curve a rightward shift of the aggregate demand curveAccording to the model of aggregate supply and aggregate demand, in the long run, an increase in the money supply should cause a) prices to fall and output to remain unchanged. b) prices to rise and output to remain unchanged. c) prices to rise and output to rise d) prices to fall and output to fall
- Aggregate demand shifts right if at a given price level a. taxes rise and shifts left if the money supply increases. b. taxes rise and shifts right if the money supply increases. c. taxes fall and shifts left if the money supply increases. d. taxes fall and shifts right if the money supply increases.An increase in the money supply will: OPTIONS: decrease aggregate demand. increase aggregate demand. increase aggregate supply. decrease aggregate supply.The aggregate demand curve for an economy slopes downward because a decrease in the price level will: A.increase the demand for money. B.put an upward pressure on interest rates. C.increase the purchasing power of money. D.make domestically produced goods more expensive relative to foreign goods.
- The short-run aggregate supply curve slopes upward because a higher price level Group of answer choices raises real wages if nominal wages are sticky. raises nominal wages if real wages are sticky. reduces nominal wages if real wages are sticky. reduces real wages if nominal wages are sticky.The slope and position of the long-run aggregate supply curve Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply. The size of the labor force The level of technological knowledge The price level The quantity of physical capitalAssume the Federal Reserve triples the growth rate of the quantity of money in circulation. In the long run, this increase in money growth will affect which of the following? Check all that apply. -The inflation rate -The size of the labor force -The quantity of physical capital -The price level Suppose when unemployment is at its natural rate the economy produces a level of real GDP equal to $70 billion. Using the purple points (diamond symbol) plot the economy's long-run aggregate supply (LRAS) curve on the graph. Suppose now the government passes a law that reduces unemployment benefits in a way that causes unemployed workers to seek out new jobs more quickly. This change in policy will cause the natural rate of unemployment to (increase/fall/decrease) , which will: - Shift the long-run aggregate supply curve to the right - Not impact the long-run aggregate supply curve - Shift the long-run aggregate supply curve to the left…
- Assume a country’s economy is currently in recession. Draw a correctly labeled graph of the long-run aggregate supply, short-run aggregate supply, and aggregate demand curves, and show each of the following. Current real output, labeled Y1, and current price level, labeled PL1 Full employment output, labeled Yf Identify one action the central bank can take to help the economy recover from the recession. Draw a correctly labeled graph of the money market, and show the impact of the central bank’s action identified in part (b) on the nominal interest rate. On your graph for part (a), show the effect of the central bank’s action identified in part (b) on real output and the price level. Assume there is an increase in business confidence as a result of the central bank’s action. What will happen to the demand for capital goods? Draw a correctly labeled graph of the loanable funds market, and show the effect of the change identified in part (e)(i) on the real interest…Assume a country’s economy is currently in recession. Draw a correctly labeled graph of the long-run aggregate supply, short-run aggregate supply, and aggregate demand curves, and show each of the following. Current real output, labeled Y1, and current price level, labeled PL1 Full employment output, labeled Yf Identify one action the central bank can take to help the economy recover from the recession. Draw a correctly labeled graph of the money market, and show the impact of the central bank’s action identified in part (b) on the nominal interest rate. On your graph for part (a), show the effect of the central bank’s action identified in part (b) on real output and the price level. Assume there is an increase in business confidence as a result of the central bank’s action. What will happen to the demand for capital goods? Draw a correctly labeled graph of the loanable funds market, and show the effect of the change identified in part (e)(i) on the real interest…When the Fed sells bonds, the amount of money in circulation in the economy_______ . This drives interest rates_________ , which causes businesses to invest________ in capital improvements such as new factories and upgraded equipment. The result is_________ in aggregate demand,________ in the equilibrium price level, and______ in the equilibrium level of real GDP.
