@ DHE CENGAGE MINDTAP Homework (Ch 15) 2. Explaining short-run economic fluctuations A majority of economists believe that in the long run, real economic variables and nominal economic variables behave independently of one another. For example, an increase in the money supply, a no long-run effect on the quantity of goods and services the economy can produce, a quantity of money will impact the price level but not the output level is known as VERTICAL AXIS variable, will cause the price level, at AS However, in the short run, most economists believe that real and nominal variables are intertwined. Economists use the model of aggregate demand. and aggregate supply to examine the economy's short-run fluctuations around the long-run output level. The following graph shows an incomplete short-run aggregate demand (AD) and aggregate supply (AS) diagram-it needs appropriate labels for the axes and curves. In the questions that follow you will identify some of the missing labels. AD variable, to increase but will have. variable. The notion that an increase in the (?) . Q Search this course X
@ DHE CENGAGE MINDTAP Homework (Ch 15) 2. Explaining short-run economic fluctuations A majority of economists believe that in the long run, real economic variables and nominal economic variables behave independently of one another. For example, an increase in the money supply, a no long-run effect on the quantity of goods and services the economy can produce, a quantity of money will impact the price level but not the output level is known as VERTICAL AXIS variable, will cause the price level, at AS However, in the short run, most economists believe that real and nominal variables are intertwined. Economists use the model of aggregate demand. and aggregate supply to examine the economy's short-run fluctuations around the long-run output level. The following graph shows an incomplete short-run aggregate demand (AD) and aggregate supply (AS) diagram-it needs appropriate labels for the axes and curves. In the questions that follow you will identify some of the missing labels. AD variable, to increase but will have. variable. The notion that an increase in the (?) . Q Search this course X
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter33: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
Problem 7PA
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2. Explaining short-run economic fluctuations
A majority of economists believe that in the long run, real economic variables and nominal economic variables behave independently of one another.
For example, an increase in the money supply, a (real/nominal) variable, will cause the price level, a (real/nominal) variable, to increase but will have no long-run effect on the quantity of goods and services the economy can produce, a (real/nominal) variable. The notion that an increase in the quantity of money will impact the price level but not the output level is known as (price neutrality/monetary neutrality/the quantitiy theory).
However, in the short run, most economists believe that real and nominal variables are intertwined. Economists use the model of aggregate demand and aggregate supply to examine the economy's short-run fluctuations around the long-run output level. The following graph shows an incomplete short-run aggregate demand (AD) and aggregate supply (AS) diagram—it needs appropriate labels for the axes and curves. In the questions that follow you will identify some of the missing labels.
The aggregate (supply/demand) curve shows the quantity of output that households, firms, the government, and foreign customers want to buy at each price level.
The vertical axis of the aggregate demand and aggregate supply model measures the overall (supply/demand/overall price level/quantity of output) .
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