5/2046511/quizzes/3587775/take16. Consider starting from full-employment equilibrium in our Aggregate Demand and Supply model(with flexible wages and worker misperception of price level changes in the short run), at Po, QN onthe output market graph below. Then we get a decrease in Aggregate Demand from Agg Do to AggD1.PLR Agg SSR Agg S.P.P,Agg DAgg D,Q,We can say thatO In the long run, P and Q will return to original levels when workers percèive the decrease in P.O In the long run, Q will increase back toward QN as workers take pay cuts that match the deflation rate.O at P1, Q1, we see that we had economic growth.O None of the other options.O at P1, Q1, we see that we were in an inflationary gap.

Aggregate supply is the total amount of goods and services that firms are willing to sell at a given…

D1. LR Agg S P. P, Agg a, ON We can say that O In the long run, P and Q will re O In the long run, Q will increase O at P1, Q1, we see that we had O None of the other options. O at P1, Q1, we see that we wer

D1. LR Agg S P. P, Agg a, ON We can say that O In the long run, P and Q will re O In the long run, Q will increase O at P1, Q1, we see that we had O None of the other options. O at P1, Q1, we see that we wer

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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Question

5/2046511/quizzes/3587775/take
16. Consider starting from full-employment equilibrium in our Aggregate Demand and Supply model
(with flexible wages and worker misperception of price level changes in the short run), at Po, QN on
the output market graph below. Then we get a decrease in Aggregate Demand from Agg Do to Agg
D1.
P
LR Agg S
SR Agg S.
P.
P,
Agg D
Agg D,
Q,
We can say that
O In the long run, P and Q will return to original levels when workers percèive the decrease in P.
O In the long run, Q will increase back toward QN as workers take pay cuts that match the deflation rate.
O at P1, Q1, we see that we had economic growth.
O None of the other options.
O at P1, Q1, we see that we were in an inflationary gap.

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