Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD1 the result in the long run would be:
A. P4 and Y1.
B. P4 and Y2.
C. P5 and Y1.
D. P5 and Y2.
Answer: D
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Fiscal policy during periods of relatively low unemployment and low inflation have
A) little effect due to time lags and the crowding-out effect. B) significant effect due to the timely intervention of the president and congress. C) significant effect because the changes in fiscal policy gives investors confidence in the economy. D) little effect because the global market makes up fifty percent of aggregate spending.
A monopoly has
a. A perfectly elastic demand curve b. A perfectly elastic supply curve c. An inelastic demand curve d. A less elastic demand curve than a competitive firm
If a central bank announced that it was going to decrease inflation by 5%, people revised their inflation expectations downward by 4%, and the central bank only lowered inflation by 1%, the short run Phillips curve would shift
a. right and unemployment would rise. b. right and unemployment would fall. c. left and unemployment would rise. d. left and unemployment would fall.
The economy is in both a short- and long-run equilibrium if:
A. the long-run aggregate supply curve is at potential output. B. current inflation equals expected inflation and current output equals potential output. C. the aggregate demand curve intersects the short-run aggregate supply curve. D. the short-run aggregate supply curve intersects the long-run aggregate supply curve at potential output.