QUESTION 15 Expenditures, Income 60 50 40 30 20 10 0 80 Price level .88888 70 60 50 30 10 0 0 0 10 20 30 40 50 real GDP=Q 10 20 30 real GDP=Q AS AD Q AE AEo ADO 40 50 Expenditures, Income Price level 60 50 40 30 20 10 0 0 80 70 60 50 40 30 20 10 0 0 10 10 I 20 30 40 50 real GDP=Q AS 20 30 40 real GDP Q AE* AEo AD ADO. 50 5. Which of the following statements is/are true about the diagrams above depicting the macroeconomy in both Keynesian and Classical frameworks and a change from AEo to AE* and ADo to AD*? O(a) The left-hand diagrams show the effect of an increase in Aggregate Expenditures (and Aggregate Demand), where the short-run Aggregate Supply is horizontal, meaning a constant products price level. (b) The right hand diagrams show the effect of an increase in Aggregate Expenditures (and Aggregate Demand), where short-run Aggregate Supply is vertical (constant Aggregate Quantity Supplied). O(c) The left-hand diagrams illustrate the Keynesian range of the short-run Aggregate Supply curve, where Keynesian expansionary policy does not cause any inflation and thus is very effective. O (d) The right-hand diagrams illustrate the Classical or Monetarist range of the short-run Aggregate Supply curve, where Keynesian expansionary policy is totally dissipated in inflation and thus is totally ineffective. O(e) All the above
QUESTION 15 Expenditures, Income 60 50 40 30 20 10 0 80 Price level .88888 70 60 50 30 10 0 0 0 10 20 30 40 50 real GDP=Q 10 20 30 real GDP=Q AS AD Q AE AEo ADO 40 50 Expenditures, Income Price level 60 50 40 30 20 10 0 0 80 70 60 50 40 30 20 10 0 0 10 10 I 20 30 40 50 real GDP=Q AS 20 30 40 real GDP Q AE* AEo AD ADO. 50 5. Which of the following statements is/are true about the diagrams above depicting the macroeconomy in both Keynesian and Classical frameworks and a change from AEo to AE* and ADo to AD*? O(a) The left-hand diagrams show the effect of an increase in Aggregate Expenditures (and Aggregate Demand), where the short-run Aggregate Supply is horizontal, meaning a constant products price level. (b) The right hand diagrams show the effect of an increase in Aggregate Expenditures (and Aggregate Demand), where short-run Aggregate Supply is vertical (constant Aggregate Quantity Supplied). O(c) The left-hand diagrams illustrate the Keynesian range of the short-run Aggregate Supply curve, where Keynesian expansionary policy does not cause any inflation and thus is very effective. O (d) The right-hand diagrams illustrate the Classical or Monetarist range of the short-run Aggregate Supply curve, where Keynesian expansionary policy is totally dissipated in inflation and thus is totally ineffective. O(e) All the above
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter15: Measuring A Nation's Income
Section: Chapter Questions
Problem 7PA
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Transcribed Image Text:QUESTION 15
Expenditures, Income
Price level
60
50
40
30
20
10
0
80
70
60
50
40
30
20
10
。
0
0
0
10
10
20 30 40 50
real GDP=Q
20 30
real GDP=Q
AS
AD
Q
AE*
AEo
ADO
40 50
Expenditures, Income
Price level
60
50
40
30
0
。 8 8 88888
80
70
60
50
40
30
20
10
0
0
0
10
10
20 30 40
real GDP = Q
AS
20 30 40
real GDP = Q
50
Q
AE*
AEo
AD*.
50
ADO
15. Which of the following statements is/are true about the diagrams above depicting the macroeconomy in both Keynesian and Classical frameworks and a change from AEo to AE* and ADo to AD*?
O (a) The left-hand diagrams show the effect f an increase in Aggregate Expenditures (and Aggregate Demand), where the short-run Aggregate Supply is horizontal, meaning a constant products price level.
(b) The right hand diagrams show the effect of an increase in Aggregate Expenditures (and Aggregate Demand), where short-run Aggregate Supply is vertical (constant Aggregate Quantity Supplied).
O (c) The left-hand diagrams illustrate the Keynesian range of the short-run Aggregate Supply curve, where Keynesian expansionary policy does not cause any inflation and thus is very effective.
O (d) The right-hand diagrams illustrate the Classical or Monetarist range of the short-run Aggregate Supply curve, where Keynesian expansionary policy is totally dissipated in inflation and thus is totally ineffective.
O (e) All the above
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