An increase in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?
A) The price level will rise, and the level of GDP will fall.
B) The price level will rise, and the level of GDP will be unaffected.
C) The price level will fall, and the level of GDP will fall.
D) The price level will fall, and the level of GDP will rise.
B
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Consider an economy in long-run equilibrium with an inflation rate (?) of 0.08 per year and a natural unemployment rate of 0.05
. Suppose Okun's law holds and a one percentage point increase in the unemployment rate reduces real output by 2% of full-employment output. The expectations-augmented Phillips curve is given by ? = ?e - 2.5 (u - 0.05). Consider a two-year disinflation. In the first year, ? = 0.06 and ?e = 0.08. In the second year, ? = 0.04 and ?e = 0.05. (a) In the first year, what is the value of the unemployment rate? (b) In the first year, by what percentage does output fall short of full-employment output? (c) In the second year, what is the value of the unemployment rate? (d) In the second year, by what percentage does output fall short of full-employment output? (e) What is the sacrifice ratio for this disinflation?
Which of the following would likely increase the money supply?
a. The purchase of government securities by one bank from another bank b. An increase in the required reserve ratio c. An increase in the reserves of a commercial bank d. An increase in the discount rate e. The sale of government securities by a bank to the Fed
The notion that our ability to conserve natural resources is growing more rapidly than their supplies are dwindling is supported by the fact that
a. most economists do not regard the availability of natural resources as a determinant of productivity. b. the quantity of natural resources does not enter into any production function. c. inflation-adjusted prices of most natural resources have been stable or fallen over time. d. inflation-adjusted prices of most natural resources have risen over time.
An upright vacuum manufacturer is losing ground in the marketplace to manufacturers selling robotic models that offer smart technology. How might this impact the company’s demand curve for labor?
a. It would shift upward. b. It would shift downward. c. It would shift to the right. d. It would shift to the left.