Question 24 What happens on the aggregate demand curve when there is a rise in the price level which causes a change in the interest rate? There is an upward movement along the aggregate demand curve. There is a downward movement along the aggregate demand curve. There is no movement along the aggregate demand curve. There is a leftward shift of the aggregate demand curve. There is a rightward shift of the aggregate demand curve. Question 25 In the long run, the economy has gone through a full business cycle. at least five years have passed. some prices have adjusted. all prices have adjusted. the majority of firms are making a profit. Question 26 In the long run, the output of an economy does not grow. grows at a positive rate. depends on aggregate demand. is equal to full-employment output. depends on the price level.

Answered: What happens on the aggregate demand…

What happens on the aggregate demand curve when there is a rise in the price level which causes a change in the interest rate?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter20: Aggregate Demand And Supply

Section: Chapter Questions

Problem 8SQP

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Question

Question 24

What happens on the aggregate demand curve when there is a rise in the price level which causes a change in the interest rate?

There is an upward movement along the aggregate demand curve.
There is a downward movement along the aggregate demand curve.
There is no movement along the aggregate demand curve.
There is a leftward shift of the aggregate demand curve.
There is a rightward shift of the aggregate demand curve.

Question 25
In the long run,
1. the economy has gone through a full business cycle.
2. at least five years have passed.
3. some prices have adjusted.
4. all prices have adjusted.
5. the majority of firms are making a profit.
  
  Question 26
  In the long run, the output of an economy
  
  does not grow.
  
  grows at a positive rate.
  
  depends on aggregate demand.
  
  is equal to full-employment output.
  
  depends on the price level.

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Suppose that the United States is at full employment. Explain the effect of each of the following events on aggregate supply: Union wage settlements push the money wage rate up by 10 percent. The price level increases. Potential GDP increases Suppose that the United States is at full employment. Then the federal government cuts taxes, and all other influences on aggregate demand remain the same. Explain the effect of the tax cut on aggregate demand in the short run.
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