In the classical model, what is the result of an increase in aggregate demand?
A. Real GDP increases, and the price level remains constant.
B. The price level increases, and real GDP remains constant.
C. Real GDP decreases, and the price level remains constant.
D. The price level decreases, and real GDP remains constant.
Answer: B
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The key to understanding the short-run trade-off behind the Phillips curve is that an increase in inflation will decrease unemployment if the inflation is ________ by both workers and firms
A) ignored B) perfectly predicted C) expected D) unexpected
A Ghanaian farmer produces wheat without incurring cost of inputs and sells for 1000 to a miller who grinds wheat into flour and sells for 1200 to a baker. The baker sells bread to consumers for 1600. The total value added is # randomize
A. 1600 B. 2200 C. 1000 D. 1400
The ________ lag for fiscal policy requires changes in congressional-approved spending and tax programs.
A. recognition B. response C. implementation D. reorganization
The recession phase of the business cycle is typically associated with higher ________ and lower ________.
A. income; real GDP B. employment; income C. real GDP; unemployment D. unemployment; output