In the neoclassical model, if the economy starts out on the LRAS (Long Run Aggregate Supply curve), with GDP equal to potential GDP, but then aggregate demand shifts to the left for any reason, what effect will this have in the long run? O a. Inflation O b. Higher real GDP Oc. Deflation and lower real GDP O d. Inflation and higher real GDP e. Deflation Of. Lower real GDP
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- QUESTION 7 Suppose a hurricane destroys 20% of the capital stock in a country. In the long run, output will O a. remain unchanged; remain unchanged O b. decrease; decrease c. decrease; increase O d. remain unchanged; increase O e. decrease; remain unchanged QUESTION 8 Menu costs help to explain: O a. why the long-run aggregate supply curve is horizontal. b. the negative slope of the aggregate demand curve. O c. why the long-run aggregate supply curve is vertical. O d. the negative slope of the aggregate supply curve. O e. the positive slope of the short-run aggregate supply curve. QUESTION 9 Suppose new drilling techniques increase the world oil supply. In the long run, output will O a. increase; remain unchanged a b. increase; increase C c. remain unchanged; remain unchanged O d. remain unchanged; decrease O e. increase; decrease and the price level will and the price level willIf Aggregate Demand is at AD2, production will be high as possible. Can production stay at this level foever? Price Level Price Level GDP POTENTIAL AD₁ GDP POTENTIAL AS GDP MAX AD₁ AS GDP MAX AD2 GDP AD2 GDP Select one: O a. No, because eventually, higher aggregate demand will raise prices, and this will make some people less willing to do additional work Oc. All of these are true Od. Yes, because this is maximum production e. None of these are true O b. No, because eventually higher aggregate demand will cause prices to fall, and this will make producers decide to produce lessciples of Macroeconomics || Fall20 1 What does the PPI measure? ed Select one: d out of O a the average change in the prices paid for all goods produced in the economy over a given year O b. the level of production of goods and services generated in the economy in a given year question O c. the difference between the prices consumers pay for goods and services and the prices producers pay for O d. the average of the prices received by producers of goods and services at all stages of the production pro Ti navigation Type here to search
- If price level is held constant and we decrease consumption, the aggregate demand curve will shift to theSelect one:O a. NortheastO b. SouthwestO cc Neither A nor BAt which range the economy is producing at full employment according to the aggregate supply curve. O a. Intermediate range O b. None c. Aggregate demand range O d. Keynesian range е. Classical rangeS Which of the following is true of a recessionary gap? O a. In the long run, this gap closes when the aggregate demand curve shifts rightward. b. It measures the amount by which actual output is greater than an economy's potential output. O c. It develops when the expected price level is less than the actual price level. O d. In the long run, this gap closes when resource suppliers negotiate lower resource payments. Oe. In the long run, this gap closes when the short-run aggregate supply curve shifts leftward. prt sc oooo O Icon Key II 1 FB
- Consider the following graph. Suppose the economy is currently at point A. Suppose there is a temporary decrease in the prices of raw materials. (Raw materials are used for production.) The economy will go to point, in short run, and then point in long run. Price level O C; B OB;A OB; C O CA ODA Question 2 LRAS - O vertical straight; increase by 10 percent O upward sloping: decrease by 10 percent O vertical straight; remain unchanged O downward sloping: increase by 10 percent Odownward sloping: decrease by 10 percent SRAS₁ SRAS AD Real GDP (Y) 4 LRAS is a(n) line. If the price level drops by 10 percent, then all else being equal, the long- run quantity of aggregate supply willWhich of the following statements is correct? O A. The price level does not effect the level of real GDP demanded. O B. The higher the price level, the more.the aggregate demand curve shifts rightward. OC. The lower the price level, the greater the quantity of real GDP demanded O D. The lower the price level, the more the aggregate demand curve shifts leftward. E. The lower the price level, the more the aggregate demand curve shifts rightward.Which of the following statements are true? Select one or more: O a. A recession is a downturn in the rate of growth of GDP O b. The length of a single business cycle is measured from its peak to its trough c. A recession in the UK is at least two consecutive quarters of negative growth in GDP. O d. Recession in the UK occurs every 7 years.
- The long-run aggregate supply curve is Select one: O a.a vertical line through the non-inflationary rate of output. O b.a vertical line through the natural rate level of output. O ca horizontal line through the current level of output. d. a vertical line through the current level of output.During the 2008–2009 recession, the Z-pop ratio O A. increased. O B. stayed the same. O C. decreased. D. all of the above. O E. none of the above.Price Level LAS AS1 AD AS2 Real GDP Refer to the graph above to answer this question. If the economy was initially at point A, what would a movement to point B suggest? Select one: O a. The movement could be the result of an increase in nominal wages Ob. The movement could be the result of increased government spending. O c. The movement could be the result of an increase in aggregate demand. d. The movement could be the result of a decrease in the costs of production. O