Now adjust the graph to show the new long-run equilibrium. What causes the economy to move from its short-run equilibrium to its long-run equilibrium? The government increases taxes to curb aggregate demand. The government increases spending to increase aggregate demand. Nominal wages, prices, and perceptions adjust downward to this new price level. Nominal wages, prices, and perceptions adjust upward to this new price level. Which of the following is true according to the sticky-wage theory of aggregate supply as a result of the decrease in the money supply? Check all that apply. Π Nominal wages at the initial equilibrium are equal to nominal wages at the new short-run equilibrium. Nominal wages at the initial equilibrium are less than nominal wages at the new long-run equilibrium. Real wages at the initial equilibrium are equal to real wages at the new short-run equilibrium. Real wages at the initial equilibrium are equal to real wages at the new long-run equilibrium. Judging by the impact of the money supply on nominal and real wages, this analysis effects in the short run but is neutral in the long run. consistent with the proposition that money has real
Now adjust the graph to show the new long-run equilibrium. What causes the economy to move from its short-run equilibrium to its long-run equilibrium? The government increases taxes to curb aggregate demand. The government increases spending to increase aggregate demand. Nominal wages, prices, and perceptions adjust downward to this new price level. Nominal wages, prices, and perceptions adjust upward to this new price level. Which of the following is true according to the sticky-wage theory of aggregate supply as a result of the decrease in the money supply? Check all that apply. Π Nominal wages at the initial equilibrium are equal to nominal wages at the new short-run equilibrium. Nominal wages at the initial equilibrium are less than nominal wages at the new long-run equilibrium. Real wages at the initial equilibrium are equal to real wages at the new short-run equilibrium. Real wages at the initial equilibrium are equal to real wages at the new long-run equilibrium. Judging by the impact of the money supply on nominal and real wages, this analysis effects in the short run but is neutral in the long run. consistent with the proposition that money has real
Chapter20: Aggregate Demand And Supply
Section: Chapter Questions
Problem 8SQP
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Transcribed Image Text:Now adjust the graph to show the new long-run equilibrium.
What causes the economy to move from its short-run equilibrium to its long-run equilibrium?
The government increases taxes to curb aggregate demand.
The government increases spending to increase aggregate demand.
Nominal wages, prices, and perceptions adjust downward to this new price level.
Nominal wages, prices, and perceptions adjust upward to this new price level.
Which of the following is true according to the sticky-wage theory of aggregate supply as a result of the decrease in the money supply? Check all that
apply.
Π
Nominal wages at the initial equilibrium are equal to nominal wages at the new short-run equilibrium.
Nominal wages at the initial equilibrium are less than nominal wages at the new long-run equilibrium.
Real wages at the initial equilibrium are equal to real wages at the new short-run equilibrium.
Real wages at the initial equilibrium are equal to real wages at the new long-run equilibrium.
Judging by the impact of the money supply on nominal and real wages, this analysis
effects in the short run but is neutral in the long run.
consistent with the proposition that money has real
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