The economy is initially in long-run equilibrium. Expectations are adaptive, prices and wages are flexible, and there is an unanticipated increase in aggregate demand. In the short run, the price level will be __________ than it was in long-run equilibrium and Real GDP will be __________ than it was in long-run equilibrium
A) higher; lower
B) lower; higher
C) lower; lower
D) higher; higher
D
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As per capita GDP has risen in the United States and other countries,
a. life expectancy and leisure time have also risen and infant mortality and illiteracy have gone down.. b. life expectancy has risen but leisure time has gone down, while infant mortality and illiteracy have remained the same. c. various quality of life variables have been unaffected. d. most quality of life variables such as life expectancy and expenditures on leisure time activities have fallen.
Since 2002, the Fed has set the primary discount rate above the IOER rate. Why is this likely to prevent the spikes in the market federal funds similar to the ones that occurred in previous years?
What will be an ideal response?
Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
A small open economy increases its investment demand. This causes the world real interest rate to ________ and the country's current account balance to ________
A) rise; fall B) remain unchanged; rise C) rise; rise D) remain unchanged; fall