An increase in aggregate demand in the short-run meansA) both the real GDP and rises in the price level would become greaterB) both the real GDP and the price level would decreaseC) the real GDP would decrease and the price level would riseD) the real GDP would increase and rises in the price level would becomesmaller

Aggregate demand (AD) refers to the total amount of goods and services that all consumers,…

An increase in aggregate demand in the short-run means OA) both the real GDP and rises in the price level would become greater B) both the real GDP and the price level would decrease OC) the real GDP would decrease and the price level would rise OD) the real GDP would increase and rises in the price level would become smaller

An increase in aggregate demand in the short-run means OA) both the real GDP and rises in the price level would become greater B) both the real GDP and the price level would decrease OC) the real GDP would decrease and the price level would rise OD) the real GDP would increase and rises in the price level would become smaller

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter14: Aggregate Demand And Supply

Section14.A: The Self Correcting Aggregate Demand And Supply Model

Problem 18SQ

See similar textbooks

Similar questions

Assume that aggregate demand is unaffected by the gas tax holiday. After the economy has fully adjusted to the gas tax holiday, the long-run effect is (an increase, no change, a decrease) in aggregate output and (an increase, no change, a decrease) in the price level.
Assume that aggregate demand is unaffected by the oil price spike. After the economy has fully adjusted to the oil price spike, the long-run effect is (no change, an increase, a decrease) in aggregate output and (no change, an increase, a decrease) in the price level.
The following events have occurred in the history of the United States: A deep recession hits the world economy. The world oil price rises sharply. S. businesses expect future profits to fall. Explain the separate effects of each event on U.S. real GDP and the price level, starting from a position of long-run equilibrium.
Suppose an economy experiences a positive supply shock. What is the short-run effect on output and the price level? Group of answer choices Output rises and the price level falls. Output and the price level both rise. Output falls and the price level rises. Output and the price level both fall.
The aggregate supply curve is upward sloping in the short-run because of the Profit effect which says the rate of output will increase as the price level increases. Profit effect which says higher input costs will cause an increase in the rate of output. Cost effect which says the rate of output will increase if production costs increase. Cost effect which says higher input costs will cause an increase in the rate of inputs. Inflation effect which says that everything costs more because U.S. debt is so large.
Because fluctuations in the world oil price make the U.S. short-run macroeconomic equilibrium fluctuate, someone suggests that the government should vary the tax rate on oil, lowering the tax when the world oil price rises and increasing the tax when the world oil price falls, to stabilize the oil price in the U.S. market. If this suggestion is implemented, when the world price of oil ______, aggregate supply would ______. A. changes; not change B. falls; increase C. rises; decrease D. falls; decrease E. rises; increase
The upward slope of the short-run aggregate supply curve is based on the assumption that: 1) Nominal wages and other resource costs do not respond to price level changes 2) Nominal wages and other resource costs do respond to price level changes 3) Nominal wages are greater than real wages 4) Nominal wages are less than real wages A fall in prices of imported resources will cause aggregate: 1) Supply to increase 2) Demand to increase 3) Supply to decrease 4) Demand to decrease
Consider a demand shock caused by a contraction in the quantity of money in the economy. Analyze the effect on the short-run equilibrium and the long-run equilibrium, with the price level and aggregate supply. Graph Analyze the effect on output, employment, and the natural rate of unemployment? Analyze short-run and long-run. Graph Analyze and compare adjustment effects with and without government intervention.
Compare the effects of a change in money supply and technology in a model with fully sticky prices and partially sticky prices. Describe the dynamics that makes the model move from a short run equilibrium to a long run equilibrium. How would your answers be different if the model had perfectly flexible prices. Why short run equilibrium output level is not efficient? Give proper economic reasoning.
Fill in the blanks. Answer questions a through d on the basis of the following graph: a. If the actual price level exceeds the expected price level reflected in long term contracts, real GDP equals ____________ and the actual price level equals _________ in the short run. b. The situation described in part a result in a _________ gap equals to ____________. c. If the actual price level is lower than the expected price level reflected in long term contracts, real GDP equals __________ and the actual price level equals ________ in the short run. d. The situation described in part C result in a ________ gap equal to ___________
How would the long-run equilibrium output change if the price level fell? Decrease, Increase or No change?
Answer questions a through F on the basis of the following graph: a. If the actual price level exceeds the expected price level reflected in long term contracts, real GDP equals ____________ and the actual price level equals _________ in the short run. b. The situation described in part a result in a _________ gap equals to ____________. c. If the actual price level is lower than the expected price level reflected in long term contracts, real GDP equals __________ and the actual price level equals ________ in the short run. d. The situation described in part C result in a ________ gap equal to ___________