What happens to the AD curve, the SRAS curve, and the LRAS curve if the central bank increases the money supply?
What will be an ideal response?
Ans: An increase in the money supply by the central bank will reduce interest rates and therefore cause AD to increase at every aggregate price level: the AD curve will shift to the right. There will be a movement along the SRAS curve due to the shift in AD and there will be no shift in the LRAS curve.
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Providing a fixed number of workers with additional capital will ________ average labor productivity at a ________ rate.
A. increase; increasing B. decrease; decreasing C. increase; constant D. increase; decreasing
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen asĀ
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward
For any transaction, the sum of consumer surplus and producer surplus is cooperative surplus
Indicate whether the statement is true or false
If the price of gasoline rose from $2.85 to $2.95 per gallon, your expenditure on gasoline would increase if your price elasticity of demand for gasoline equals
A) 1.25. B) 1.00. C) 0.75. D) Total revenue would increase at all of the above elasticities.