Why are the long-run effects of an increase in aggregate demand on price and output different from the short-run effects?
What will be an ideal response?
The long-run effects differ from the short-run effects of an increase in aggregate demand because the long-run and the short-run aggregate supply curves differ. With a vertical LRAS, changes in AD only affect the price level, not real GDP. With an upward sloping SRAS, changes in AD impact both the price level and real GDP.
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What will be an ideal response?
Other factors held constant, a decrease in resource prices will shift the aggregate:
a. demand curve leftward. b. demand curve rightward. c. supply curve leftward. d. supply curve rightward.
What happens to aggregate demand as the price level increases?
a. It increases. b. It decreases. c. It remains constant. d. It moves away from equilibrium.
Which of the following is a feature of a contestable market?
A. There is a single firm in the market serving many consumers. B. There is a single firm in the market serving many consumers and the market price is equal to marginal cost. C. The market price is equal to marginal cost. D. There are several firms in the market serving many consumers.