A decrease in aggregate supply will cause the price level to:
a. rise and GDP to fall.
b. rise and GDP to rise.
c. rise and the unemployment rate to fall.
d. fall and GDP to rise.
e. fall and the unemployment rate to rise.
a
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Answer the next question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. YearUnits of OutputPrice per Unit18$22103315441855206If year 2 is the base year, the Consumer Price Index for year 2 is
A. 50. B. 67. C. 150. D. 100.
If the Taylor Principle is not followed and nominal interest rates are increased by less than the increase in the inflation rate, then real interest rates will ________ and monetary policy will be too ________
A) rise; tight B) rise; loose C) fall; tight D) fall; loose
Positive output gap indicates that
A) the actual real GDP is above natural real GDP. B) the actual real GDP is below natural real GDP. C) nominal GDP is above real GDP. D) nominal GDP is below real GDP.
The classically-based models (classical, new classical, monetarist, real business cycle) all agree that
a. markets always clear. b. monetary policy can affect output in the short-run but not the long-run. c. changes in aggregate drive most changes in output. d. stabilization policy is ineffective. e. None of the above