A majority of economists believe that in the long run, real economic variables and nominal economic variables behave Independently of one another. For example, an Increase In the money supply, a variable, will cause the price level, a no long-run effect on the quantity of goods and services the economy can produce, a and nominal variables is known as variable, to increase but will have variable. The distinction between real variables However, In the short run, most economists believe that real and nominal variables are Intertwined. Economists use the model of aggregate demand and aggregate supply to examine the economy's short-run fluctuations around the long-run output level. The following graph shows an Incomplete short-run aggregate demand (AD) and aggregate supply (AS) diagram-It needs appropriate labels for the axes and curves. In the questions that follow you will identify some of the missing labels.
A majority of economists believe that in the long run, real economic variables and nominal economic variables behave Independently of one another. For example, an Increase In the money supply, a variable, will cause the price level, a no long-run effect on the quantity of goods and services the economy can produce, a and nominal variables is known as variable, to increase but will have variable. The distinction between real variables However, In the short run, most economists believe that real and nominal variables are Intertwined. Economists use the model of aggregate demand and aggregate supply to examine the economy's short-run fluctuations around the long-run output level. The following graph shows an Incomplete short-run aggregate demand (AD) and aggregate supply (AS) diagram-It needs appropriate labels for the axes and curves. In the questions that follow you will identify some of the missing labels.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A majority of economists believe that in the long run, real economic variables and nominal economic variables behave Independently of one another.
For example, an Increase In the money supply, a
variable, will cause the price level, a
no long-run effect on the quantity of goods and services the economy can produce, a
and nominal variables is known as
variable, to increase but will have
variable. The distinction between real variables
However, In the short run, most economists believe that real and nominal variables are Intertwined. Economists use the model of aggregate demand
and aggregate supply to examine the economy's short-run fluctuations around the long-run output level. The following graph shows an Incomplete
short-run aggregate demand (AD) and aggregate supply (AS) diagram-It needs appropriate labels for the axes and curves. In the questions that
follow you will identify some of the missing labels.
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