Adas
If the economy is at A and there is a fall in aggregate demand, in the short run the economy
moves to D
If the economy starts at C, an increase in the money supply moves the economy
to A in the long run
If the economy starts at A and there is a fall in the aggregate demand, the economy moves
to C in the long run
The economy would be moving to long run equilibrium if it started at
D and moved to C
In the short run, a favorable shift in aggregate supply will move the economy from
A to B
REFER TO STOCK MARKET BOOM 2010. Which curve shifts and in which direction?
Aggregate demand shifts right
An increase in the money supply would move the economy from C to
B in the short run and A in the long run
REFER TO STOCK MARKET 2010. In the short run what happens to the price level and real GDP?
Both the price level and real GDP rise
An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level
Bowls, shifting aggregate supply left
If the economy is in the long run equilibrium, then an adverse shift in aggregate supply will move the economy from
C to D
REFER TO STOCK MARKET BOOM 2010. What happens to the expected price level and what impact does this have on wage bargaining?
The expected price level rises. Bargains are struck for higher wages.
if something caused resources to become more readily available, then
The price level would fall and real GDP would rise
Suppose the economy is initially in long run equilibrium and aggregate demand rises. In the long run prices
are higher and output is the same as the original long run equilibrium
An economic contraction caused by a shift in aggregate demand causes prices to
fall in the short run, and fall even more in the long run
If the economy starts at A and moves to D in the short run, the economy
moves to C in the long run