The president is told that an inflationary gap must be closed but that consumers are increasing their spending on consumption and producers increasing their demand for investment goods. If the gap is to be closed, the President must

a. rely on reducing the price level
b. resort to creating a deficit budget
c. increase aggregate demand
d. rely on increasing the price level
e. resort to creating a surplus budget


E

Economics

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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

Economics

In the classical system, the quantity of money

a. determines the price level and, for a given real income, the level of nominal income. b. does not affect the equilibrium values of output, employment, and the interest rate. c. affects the equilibrium values of output, employment, and the interest rate. d. Both a and b e. Both a and c

Economics

On average, the greater the unexpected decline in aggregate demand

A) the weaker is the resulting deflation. B) the greater is the resulting deflation. C) the greater is the resulting inflation. D) the greater is the rise in the price level.

Economics

If we observe a decrease in the price of a good and an increase in the amount of the good bought and sold, this could be explained by

a. an increase in the supply of the good.
b. an increase in the demand for the good.
c. a decrease in the demand for the good.
d. a decrease in the supply of the good.

Economics