The price of oil falls.
Describe the effect on the AD curve, the SRAS curve, and the LRAS curve.
Answer: When the price of oil decreases, this causes the SRAS curve to shift to the right and results in a downward movement along the AD curve. There is no change in the LRAS curve.
You might also like to view...
If the maturity of a debt instrument is less than one year, the debt is called
A) short-term. B) intermediate-term. C) long-term. D) prima-term.
In an analytical sense, unions can be thought of as
A) setters of minimum wages. B) monopoly buyers of workers. C) generators of inflation. D) monopsonies.
The threat of a strike
a. can serve as an incentive for labor and management to reach an agreement b. destroys incentives for labor and management to reach an agreement c. is usually not taken seriously because employers know the workers will suffer during a strike d. is not taken seriously unless management expects to suffer e. is not taken seriously if public safety is at risk
The belief that the velocity of money is not constant but highly predictable is associated with the:
a. classical school. b. Keynesian school. c. supply-side school. d. rational expectations school e. monetarist school.