New classical economists say that an unanticipated increase in aggregate demand first:
A. increases the price level and real output, and then reduces short-run aggregate supply
such that the economy returns to the full-employment level of output.
B. increases the price level and real output, and then increases long-run aggregate supply.
C. increases long-run aggregate supply, and then increases the price level and real output.
D. reduces short-run aggregate supply, and then reduces long-run aggregate supply.
A. increases the price level and real output, and then reduces short-run aggregate supply
such that the economy returns to the full-employment level of output.
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In the above figure, if the interest rate is 2 percent per year, the quantity of money demanded is
A) greater than the quantity of money supplied, and the interest rate will change. B) greater than the quantity of money supplied, and the demand for money curve will shift. C) greater than the quantity of money supplied, and the supply of money curve will shift. D) less than the quantity of money supplied, and the interest rate will change. E) less than the quantity of money supplied, and the demand for money curve will shift.
Most state governments in the United States operate under constitutional provisions that severely restrict expenditures financed by borrowing
Suppose this were to change, so that state governments' access to credit markets was no different from the federal government. What consequences would you predict for the nation's aggregate debt burden?
Refer to the above figure. The rational expectations hypothesis implies that an anticipated decrease in aggregate demand from AD2 to AD1 will
A) move the economy from b to c. B) move the economy from b to a. C) move the economy from c to a. D) shift the aggregate supply (AS) curve to the left.
?The formula for "expected value" may be written as
A. ?(Probability of state A + Value in state A) × (Probability of state B + Value in state B) B. ?(Probability of state A × Value in state A) + (Probability of state B × Value in state B) C. ?(Probability of state A × Value in state A) – (Probability of state B × Value in state B) D. ?(Probability of state A – Value in state A) × (Probability of state B – Value in state B)