Which of the following is a TRUE statement in the neoclassical model of AD/AS? Because wages are flexible, they are unaffected by high rates of unemployment. O The economy cannot sustain production above its potential GDP in the long run. A surge in aggregate demand ends up as a rise in output, but does not increase price levels. O Lower wages will cause an economy-wide increase in the price of a key input.

Which of the following is a TRUE statement in the neoclassical model of AD/AS? Because wages are flexible, they are unaffected by high rates of unemployment. O The economy cannot sustain production above its potential GDP in the long run. A surge in aggregate demand ends up as a rise in output, but does not increase price levels. O Lower wages will cause an economy-wide increase in the price of a key input.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Do you believe that the Hayek’s classical AD-AS model explain the factors that cause changes (shifts) in AS realistically? Why or why not?
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n the AD-AS model, if there's a sudden increase in consumer confidence leading to more spending, what is the immediate expected impact on the Aggregate Demand (AD) curve? This is a multi answer question. You can select one or more options as the answer. A. The AD curve shifts to the left. B. The AD curve remains unchanged. C. The AD curve shifts to the right. D. The direction of the AD shift is unpredictable
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please state which one the answer is Many thanks - question is attached
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Assume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point W. The price level is Po. Now, suppose there is an exogenous fall in the price level to P2. Which of the following statements describes the likely macroeconomic effects? O A. The AE curve shifts to AE₁, a new equilibrium is established at point V, and the AD curve shifts from AD to AD¹, and equilibrium moves from point B to point D. OB. The AE curve shifts to AE2, a new equilibrium is established at point U, and the AD curve shifts from AD to AD¹, and equilibrium from point B to point D. Ⓒ C. The AE curve shifts to AE2, a new equilibrium is established at point U, and the economy moves from point B to point C along AD. O D. The AE curve shifts to AE₁, new equilibrium is established at point V, and the economy moves from point B to point C along AD⁰. Desired Aggregate Expenditure Price Level 759² Y₁ W Yo Y₂ Real GDP AE=Y AE₂ Real GDP AEo AE₁ Q ✔ Q
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