Refer to the above figure. Unexpected contractionary monetary policy has caused the aggregate demand curve to shift to AD2. In the short run
A. real GDP will be Y2, and the price level will be P2.
B. real GDP will be between Y1 and Y2, and the price level will be below P2.
C. real GDP will be Y1, and the price level will be P1.
D. real GDP will be between Y1 and Y2, and the price level will be above P1.
Answer: A
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The responsiveness of the quantity demanded of one good to a change in the price of a different good is measured by the:
A. cross-price elasticity of demand. B. income elasticity of demand. C. price elasticity of supply. D. price elasticity of demand.
Over the past decade, the United States has had a current account deficit and capital account deficit
Indicate whether the statement is true or false
Any policy change that reduced the natural rate of unemployment
a. would shift the long-run Phillips curve to the right. b. would shift the long-run aggregate-supply curve to the right. c. would be a policy change that impeded the functioning of the labor market. d. All of the above are correct.
Behavioral economics extends traditional economic models by
A) including insights from psychology and human cognition models. B) modeling behavior rather than prices. C) admitting that individuals are irrational. D) admitting that incentives are very important.