Macroeconomics
Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
Question
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Chapter 10, Problem 19QP
To determine

Impact of increase in the AD below the natural real GDP on the price level under simple Keynesian economics theory.

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How would the level of aggregate demand be affected by a rise in the interest rate in the Keynesian theory? Which components would be affected most strongly?
Consider a standard AD-AS model. If the SRAS curve is steep, a temporary tax cut leads to a relatively small increase in inflation and relatively large decrease in unemployment.Answer true, false, or uncertain. Please briefly explain your answer.
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