Suppose the economy is in long-run equilibrium. If the government decreases its expenditures, eventually the decrease in aggregate demand causes price expectations to
a) fall. This fall in price expectations shifts the short-run aggregate-supply curve to the right.
b) fall. This fall in price expectations shifts the short-run aggregate-supply curve to the left.
c) rise. This rise in price expectations shifts the short-run aggregate-supply curve to the right.
d) rise. This rise in price expectations shifts the short-run aggregate-supply curve to the left.
Answer: a) fall. This fall in price expectations shifts the short-run aggregate-supply curve to the right.
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"Fluctuations in exchange rates, other things remaining the same, create a situation in which money buys the same amount of goods and services in different currencies
" What does the previous statement describe? Will these fluctuations occur in the short run or the long run?
Suppose a consumer is spending his or her entire budget. In order to obtain the most satisfaction from his or her purchases, all goods should:
a. provide the same marginal utility per dollar. b. be consumed in equal quantities. c. have identical marginal utilities. d. give the consumer matching amounts of total utility.
The opportunity cost of holding money increases when: a. the interest rate rises
b. the interest rate falls. c. the price level falls. d. nominal GDP rises. e. nominal GDP falls.