Output and inflation movements can arise from either demand or supply shifts. How can we tell them apart?
What will be an ideal response?
While shifts in either the dynamic aggregate demand curve or the short-run aggregate supply curve can have the same effect on inflation, they have opposite effects on output. If the dynamic aggregate demand curve shifts to the right, increasing inflation, it will result in higher output. If the short-run aggregate supply curve shifts to the left, increasing inflation, output falls. Therefore changes in output associated with inflation give an indication as to whether the cause is a shift in demand or a shift in supply.
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There are two independent dealers for Sporto automobiles in a large city
The dealers decide to run a cooperative advertising campaign in which both dealers are listed in local newspapers ads, and they can purchase larger ads that are more likely to attract attention and generate more auto sales if the dealers commit more funds to the joint advertising budget. Is this an example of a cooperative constant-sum game? A) Yes, each firm can contribute zero to 100 percent of the advertising budget, so this is a constant-sum game. B) Yes, all negotiated outcomes between two firms are cooperative and constant-sum situations. C) No, the outcome of the advertising campaign depends on how much money the firms contribute to the campaign, so it is not constant sum. D) No, the firms are independent, so their interaction cannot be cooperative.
The concept of economies of scale becomes especially _____________ to international trade when it enables one or two large producers to supply the entire country.
a. problematic b. unrelated c. relevant d. unproductive
Which of the following was a lasting effect of the OPEC embargo in the 1970s on the U.S. economy?
(A) Higher gasoline prices (B) Reduced use of petroleum (C) Reduced taxes (D) Lower interest rates
The law of demand indicates that as the price of a good increases:
A. suppliers sell less of it. B. suppliers sell more of it. C. buyers buy less of it. D. buyers buy more of it.