If there is an increase in energy prices, how will it affect the short-run aggregate supply curve?
Consider an economy that is currently in long-run equilibrium. The economy experiences a rise in energy prices, causing an increase in the cost of producing most goods and services in the economy. As a result, short-run aggregate supply decreases, shifting the SRAS curve to the left. This causes prices to rise, real output to decrease, and employment to fall. The reduction of real GDP relative to the level at the natural rate of unemployment is called a recessionary gap.
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When Congress passed a law that imposed a tax designed to fund its Social Security and Medicare programs it wanted employers and workers to share the burden of the tax equally
Most economists who have studied the incidence of the tax have concluded A) the tax rate should be greater for high-income workers than for low-income workers. B) the burden of the tax falls almost entirely on workers. C) the tax is not high enough to cover the future costs of Social Security and Medicare. D) the tax on employers is too high because it reduces the employment of low-skilled workers.
A decrease in aggregate expenditure has what result on equilibrium GDP?
A) Equilibrium GDP falls. B) Equilibrium GDP rises. C) Equilibrium GDP is not affected by a decrease in aggregate expenditure. D) Equilibrium GDP may rise or fall depending on the size of the decrease in aggregate expenditure relative to the initial level of GDP.
The Federal Reserve's performance in the mid-to-late 1980s, 1990s, and early 2000s has received high marks from economists, even without inflation targeting
Indicate whether the statement is true or false
If a product constitutes a large portion of a consumer's income, demand will be more inelastic
a. True b. False Indicate whether the statement is true or false