In the above figure, if initial equilibrium is at point A and there is a fully anticipated increase in aggregate demand from AD1 to AD2 due to an anticipated increase in the money supply, then
A) the price level will shift to P2 in the long run.
B) the economy will move directly from point A to point C without passing through point B.
C) the price level will shift to P2 in the short run.
D) the economy will move directly from point A to point B, and will remain at point B in the long run.
B
You might also like to view...
You have an absolute advantage whenever you
A) are better educated than someone else. B) can produce something at a lower opportunity cost than others. C) prefer to do one particular activity. D) can produce more of something than others with the same resources.
In 2005 hurricane Katrina devastated large portions of the Gulf Coast economy. Many refineries went offline disrupting oil refining and distribution. What do you think was a likely result?
A) the restricted supply constituted a cost push shock that would have shifted the long run AS curve to the right B) the restricted supply constituted a cost push shock that would have shifted the short run AS curve to the left C) the restricted supply constituted a cost push shock that would have meant an upward movement along the Phillips curve D) all of the above E) none of the above
If the current interest rate increases,
a. the money demand curve shifts downward and the money supply curve remains unchanged. b. the money demand curve shifts upward and the money supply curve remains unchanged. c. there is a movement along the money demand curve and the money supply curve increases. d. there is a movement along the money demand curve and the money supply curve remains unchanged.
As economies are predictable, economic risk presents executives with very few challenges.
Indicate whether the statement is true or false.