Consider the basic AD/AS macro model in long-run equilibrium that experiences a positive AD shock. In the short run, the price level and output In the long run, the price level and output O a. Decreases; decreases; decreases further; decreases further. O b. Decreases; decreases; decreases further; returns to potential output. O c. Increases; increases; increases further; increases further. O d. Increases; decreases; increases further; returns to potential output. O e. Increases; increases; increases further; returns to potential output.

Consider the basic AD/AS macro model in long-run equilibrium that experiences a positive AD shock. In the short run, the price level and output In the long run, the price level and output O a. Decreases; decreases; decreases further; decreases further. O b. Decreases; decreases; decreases further; returns to potential output. O c. Increases; increases; increases further; increases further. O d. Increases; decreases; increases further; returns to potential output. O e. Increases; increases; increases further; returns to potential output.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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As shown in the diagram to the right, the short-run aggregate supply curve (AS) is upward-sloping. This positive slope is explained in part by the fact that O A. in the short-run, output prices are slower to adjust to increasing aggregate demand than are input prices. O B. input price increases cause firms to raise their prices. O C. in the short-run, input prices-particularly wage rates are slower to adjust to increasing aggregate demand than are output prices. O D. business owners are more intelligent than other resource owners. Price level, P Aggregate output (income), Y AS
QUESTION 41 A C LRAS LRAS _LRAS 大大大 40 50 20 30 40 50 20 30 real GDP = Q 20 30 real GDP = Q real GDP = Q 60 50 40 30 20 10 P level 0 10 -AS- AD + 40 50 60 50 40 30 20 10 P level 0- 41. Which of the figures above illustrates an economy in long-run equilibrium? O a) Figure A b) Figure B c) Figure C o 10 B AS AD 60 50 40 30 20 10 P level 0 10 -AS AD
Why is the aggregate demand curve downsloping? Specify how your explanation differs from the explanation for the downsloping demand curve for a single product. What role does the multiplier play in shifts of the aggregate demand curve?
1. A change in autonomous spending results to a shift of the LM curve either to the left or right. O a. False; movement along the IS curve O b. False; movement along the LM curve O c. True O d. False; shift of the IS curve 2. Which of the following statements is true? 3. O a. The goods and money markets can never be in equilibrium. O b. The goods and money markets are in equilibrium at the points where the money market is in equilibrium. O c. The goods and money markets are in equilibrium at their point of intersection only. O d. The goods and money markets are in equilibrium at the points where the goods market is in equilibrium. Which of the following describes the steepest investment schedule? O a. 1-450-8(3) O b. 1=450-2(3) O c. 1=450-9(3) O d. 1=450-5(3)
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QUESTION 1 In the neoclassical model, if the economy starts out on the LRAS (Long Run Aggregate Supply curve), with GDP equal to potential GDP, but then aggregate demand shifts to the left for any reason, what effect will this have in the long run? O a. Inflation O b. Higher real GDP Oc. Deflation and lower real GDP O d. Inflation and higher real GDP e. Deflation O f. Lower real GDP
2
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