If aggregate supply decreases, then inflation _______________ and unemployment _______________. a)increases; increases b) increases; decreases c) decreases; increases d) decreases; decreases e) decreases; stays the same
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If
a)increases; increases
b) increases; decreases
c) decreases; increases
d) decreases; decreases
e) decreases; stays the same
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- If an economy is on the horizontal portion of the aggregate supply curve, then it is: A.)in a severe recession. B.)overheating. C.)at full employment. D.)experiencing inflation.Assuming prices are sticky in the short run, a decrease in useful government spending will cause inflation to __________ in the short run and growth to ___________ in the short run. remain unchanged/decrease increase/increase decrease/increase decrease/decrease remain unchanged/remain unchangedA period of two or more quarters during which aggregate output declines is known as A) a boom. B) a recession. C) an inflation. D) a hyperinflation.
- (b) Assume that the household in an economy spend 75% of their extra income. Calculate the change of aggregate demand if government increase their spending by $150,000. (c) If prices keep rising, a nightmare scenario for the US economy is a real possibility New York (CNN Business) There's no denying it: Inflation is here. Consumer prices surged 7% over the past year. Housing prices have continued to soar, too. But the question on the minds of many economists and Wall Street strategists is whether something even worse could be in the cards: prices rising as the economy slows. Source: CNN Business, 12" January 2022. Examine the cause of stagflation, and how it affects the output and price level. (d) Based on part (c), what will happen to the output and price level if the US policymakers accommodate the shift in aggregate supply? State only one fiscal policy tool that the policymakers may use.Which of the following would cause a leftward shift of aggregate demand?(a) An expectation of increased business regulation and restrictions on the use of technology causes a decrease in investment spending.(b) A decrease in interest rates causes an increase in investment spending.(c) A depreciation of the domestic currency on foreign exchange markets causes an increase in net exports.(d) A decrease in income tax rates results in more disposable income for households and increased consumer spending.A sudden increase in consumer spending will shift the aggregate demand curve to the right and lower the price level/inflation and increase the level of GDP output. True /False
- One reason the short-run aggregate supply curve is positively sloped is that lower price level raises ________________ if nominal wages are sticky. (a) Real wages (b) nominal wages (c) unemployment (d) employmentThe CPI in Mexico has been increasing consistently recently. A change in expectations that reflects this trend results in a movement along(a movement along, an upward shift in , a downward shift in, no change)the short-run aggregate supply curve, (a movement along, an upward shift in , a downward shift in, no change) in the long-run aggregate supply curve, (a movement along, an upward shift in , a downward shift in, no change) in the aggregate demand curve, (a movement along, an upward shift in , a downward shift in, no change) in the short-run Phillips curve, and (a movement along, an upward shift in , a downward shift in, no change) in the long-run Phillips curve.Which of the following would cause the aggregate supply curve to increase... A) Energy prices such as gas and electricity have increased rapidly throughout the country. B) The government has reduced its spending by more than 10% over the last 2 years C) Consumers are more confident and spending more than before. D) Throughout the economy, workers are using better equipment and output per hour is rising.
- Expectations of inflation are ____________ effective than/as actual inflation in ____________ production costs. a) less; increasing b) less; decreasing c) as; increasing d) as; decreasing e) more; increasingAggregate demand is the total quantity of output A)consumers actually buy. B) producers are able and willing to supply at different price levels. C) demanded if the economy is in equilibrium. D) demanded at different price levels in a given time period.Why do consumers mostly gain little buying power during a deflation?
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