2. Monetarism Which of the following is a position held by monetarists? The short-run aggregate supply curve is horizontal. The economy is unstable; wages and prices are inflexible. Aggregate demand depends on the money supply and on velocity. The velocity of money is constant. Initially, the economy is in long-term equilibrium. Suppose there is an increase in velocity-that is, there is an increase in the average number of times a dollar is spent to buy goods and services. Show the long-run effect of this change according to the monetarist view, ceteris paribus, by dragging one or both curves on the graph below. ? PRICE LEVEL REAL GDP SRAS AD AD SRAS

2. Monetarism Which of the following is a position held by monetarists? The short-run aggregate supply curve is horizontal. The economy is unstable; wages and prices are inflexible. Aggregate demand depends on the money supply and on velocity. The velocity of money is constant. Initially, the economy is in long-term equilibrium. Suppose there is an increase in velocity-that is, there is an increase in the average number of times a dollar is spent to buy goods and services. Show the long-run effect of this change according to the monetarist view, ceteris paribus, by dragging one or both curves on the graph below. ? PRICE LEVEL REAL GDP SRAS AD AD SRAS

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

CS 16

Subject - Economics

2. Monetarism
Which of the following is a position held by monetarists?
The short-run aggregate supply curve is horizontal.
The economy is unstable; wages and prices are inflexible.
Aggregate demand depends on the money supply and on velocity.
The velocity of money is constant.
Initially, the economy is in long-term equilibrium. Suppose there is an increase in velocity-that is, there is an increase in the average number of
times a dollar is spent to buy goods and services.
PRICE LEVEL
Show the long-run effect of this change according to the monetarist view, ceteris paribus, by dragging one or both curves on the graph below.
REAL GDP
SRAS
AD
AD
SRAS
?

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