The ratchet effect means that: Multiple Choice when aggregate demand increases, the price level remains constant. when aggregate supply increases, the price level decreases. when aggregate demand decreases, the price level remains constant. when aggregate supply decreases, the price level increases.

The ratchet effect means that: Multiple Choice when aggregate demand increases, the price level remains constant. when aggregate supply increases, the price level decreases. when aggregate demand decreases, the price level remains constant. when aggregate supply decreases, the price level increases.

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter18: Debates In Macroeconomics Over The Rolse And Effects Of Government

Section: Chapter Questions

Problem 2WNG

See similar textbooks

Similar questions

Chose one from Multiple choice. 3. Which of the following statements is true if there is an increase in aggregate demand while the economy is in equilibrium on a positively sloping short-run aggregate supply curve? a) Prices rise, national income does not change B) Prices decrease, national income does not change C) Prices go up and national income goes down. D) Prices decrease and national income decreases. E) Prices rise, national income rises
If aggregate supply is vertical, then which of the following statements must be true? Aggregate demand does not affect the quantity of output. Inflation creates greater social benefits. Inflation will accompany any rise in output. Aggregate demand does not cause inflationary changes in price level.
Suppose an aggregate supply curve shifts right and this is the only change in the economy. What will certainly NOT happen? Group of answer choices: Higher output Lower output Lower price level Aggregate demand curve remains unchanged Which of the following helps to increase employment and decrease inflation? Group of answer choices: Right shift of an aggregate supply curve Right shift of the aggregate demand curve Left shift of the aggregate demand curve Left shift of an aggregate supply curve
Suppose an aggregate supply curve shifts right and this is the only change in the economy. What will certainly NOT happen? Group of answer choices Lower output Lower price level Higher output Aggregate demand curve remains unchanged
In our Aggregate Demand and Supply model, a decrease in Aggregate Demand would cause which of the following in the short run? Group of answer choices a) neither deflation nor inflation b) deflation and recession c) inflation and economic growth d) inflation and recession e) deflation and economic growth
A large reduction in oil prices will cause: Group of answer choices a leftward shift in the aggregate demand curve. a rightward shift in the aggregate supply curve. a leftward shift in the aggregate supply curve. a rightward shift in the aggregate demand curve.
Which of the following helps to increase employment and decrease inflation? Group of answer choices: Right shift of an aggregate supply curve Left shift of an aggregate supply curve Right shift of the aggregate demand curve Left shift of the aggregate demand curve
Suppose that the government believes the economy is not producing goods and services at its optimal level. In an attempt to stimulate the economy, the government increases the quantity of money in the economy by printing more money. This monetary policy the economy's demand for goods and services, leading to product prices. In the short run, the change in prices induces firms to produce goods and services. This, in turn, leads to a level of unemployment. In other words, the economy faces a trade-off between inflation and unemployment: Higher inflation leads to unemployment.
In the long run, an increase in government purchases will raise the price level, but not production or employment. True or false
Given the following circumstances, indicate whether or not the aggregate supply curve would shift and, if so, which way would it shift: The price of a barrel of oil doubles An advance in alternative energy technology significantly reduces its cost In order to maintain a relatively clean air quality, a carbon emissions tax is levied against firms with a carbon footprint As a result of fracking, the price of natural gas is significantly reduced Advances in technology increase the productivity of the American worker, on average, by 30%
According to the “wealth effect”, when the price level increases people feel less well off, and they decrease consumption in order to accumulate more wealth.
Unemployment would decrease and prices would increase if a. aggregate supply shifted left. b. aggregate demand shifted right. c. aggregate supply shifted right. d. aggregate demand shifted left.