Consider the following statement: "Unemployment can be caused by a decrease in aggregate demand or a decrease in aggregate supply." Note whether this is true or false and specify the effect on the price-level in each case. True. A decrease in aggregate supply will unambiguously increase the price level. A decrease in aggregate demand will reduce the price level if economy is operating above its full-employment output or if prices are not sticky. False. A decrease in aggregate supply will unambiguously increase the price level. A decrease in aggregate demand will reduce the price level if economy is operating above its full-employment output or if prices are not sticky. True. A decrease in aggregate supply will decrease the price level. A decrease in aggregate demand will increase the price level. False. A decrease in aggregate supply will decrease the price level. A decrease in aggregate demand will increase the price level,

Consider the following statement: "Unemployment can be caused by a decrease in aggregate demand or a decrease in aggregate supply." Note whether this is true or false and specify the effect on the price-level in each case. True. A decrease in aggregate supply will unambiguously increase the price level. A decrease in aggregate demand will reduce the price level if economy is operating above its full-employment output or if prices are not sticky. False. A decrease in aggregate supply will unambiguously increase the price level. A decrease in aggregate demand will reduce the price level if economy is operating above its full-employment output or if prices are not sticky. True. A decrease in aggregate supply will decrease the price level. A decrease in aggregate demand will increase the price level. False. A decrease in aggregate supply will decrease the price level. A decrease in aggregate demand will increase the price level,

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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“Members of Congress are interested in increasing the minimum wage from its current rate of $7.25 an hour to $15. What effect will this have on the unemployment rate for low-skilled workers? How is this likely to impact equilibrium output and the price level in the short run?"
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