Suppose that the economy is hit by a negative demand shock (a shock that causes AD to shift left), and the central bank chooses to do nothing in response. What will happen in the long-run? O Output will be lower. O Inflation will be lower. O Output will be higher. O Inflation will be higher. O Inflation will not change.
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- Which of the following shifts in aggregate demand and short-run aggregate supply would cause an unambiguous increase in inflation? Select one: O a. A decrease in AD and an increase in SRAS O b. No change in AD and an increase in SRAS O c. An increase in AD and an increase in SRAS d. An increase in AD and a decrease in SRAS O e. A decrease in AD and a decrease in SRASThe economy begins in a long-run equilibrium. Then something causes AD to decrease. What would result after this decrease in the short-run? O inflation and a recession O inflation and an expansion O deflation and a recession O deflation and an expansionPlease give just answer. There is no need to explain. i. If a country experiences high GDP and inflation, followed by a lower GDP and deflation, this is an example of O Unemployment O Recession O the Business Cycle O Supply and Demand O None of the above ji. What causes inflation? O People don't have enough money O People have too much money O People have too much money and many businesses want some of that money People owe a lot of money The government causes inflation by raising interest rates iii. The Water and Diamond Paradox explains: Why supply and demand always meets in the middle of a graph O Marginal utility of diamonds O Why water is inexpensive while diamonds are so expensive O Why water is so expensive while diamonds are inexpensive O None of the above iv. The unemployment rate is: O The number of people who don't want to work The number of people who are working but don't want to work The number of people who don't want to work and are not working The number of people who…
- When inflation falls, people Select one: O a. make less frequent trips to the bank and firms make more frequent price changes O b. make more frequent trips to the bank and firms make less frequent price changes Oc. make less frequent trips to the bank and firms make less frequent price changes O d. make more frequent trips to the bank and firms make more frequent price changes ge en this pageHow can a stagflation turn into a cost-push inflation process? A stagflation can turn into a cost-push inflation process when OA. the quantity of money persistently decreases O B. taxes consistently increase OC. the quantity of money persistently increases O D. the money wage rate decreasesImagine the U.S. economy is in long-run equilibrium. Then suppose the value of the U.S. dollar increases. At the same time, people in the U.S. revise their expectations so that the expected price level falls. We would expect that in the short-run O the price level will rise, and real GDP might rise, fall, or stay the same. O real GDP will rise and the price level might rise, fall, or stay the same. O the price level will fall, and real GDP might rise, fall, or stay the same. O real GDP will fall and the price level might rise, fall, or stay the same.
- Q1 If people expect this period's inflation is equal to last period's inflation, an increase in the price of oil in the medium run will cause: a. A reduction in output O b. An increase in the real policy rate All of the answers here are correct Oc Od. An increase in the price levelWhich is NOT neutral in the long run? O output O aggregate demand O money real interest ratesConsider the short run and the long run and then choose the statement that is correct. O A. The real interest rate is independent of the inflation rate in the long run. B. The real interest rate is dependent on the price level in the long run. C. In the short run, money market equilibrium determines the price level. D. In the short run, other things remaining the same, a given percentage change in the quantity of money brings an equal percentage change in the price level.
- Which of the following represents a short-run e_ect of a monetary contraction? Select one: O a. an increase in the interest rate O b. a reduction in the price level O c. all of the above O d. a reduction in outputEverything else held constant a change in workers' expectations about inflation will cause to change. Select one: O a the production function b. aggregate demand Oc short-run aggregate supply O d.long-run aggregate supplyWhat determines a country's long run average Inflation rate? Select one: a. The rate of inflation in a country's trading partners. Ob. The rate at which the national debt is rising. c. The rate at which costs are rising. O d. The real rate of currency depreciation. O e. The growth rate of the money supply.