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copperelk290Lv1

28 Sep 2019

In the AD-SRAS-LRAS diagram, what does each curve represent, and what will shift each LEFTWARD?

AD:

SRAS:

LRAS:

Explain the relationship between the different slopes of the SRAS curve and Say's Law and the Keynesian perspective?

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Joshua StredderLv10

28 Sep 2019

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Related questions

8. Imagine a Small open economy in the Classical theory. What happens to NX and real exchange rate if aggregate savings go down?

a) NX goes into deficit and real exchange rate rises.

b) NX goes into deficit and real exchange rate falls.

c) NX goes into surplus and real exchange rate rises.

d) NX goes into surplus and real exchange rate falls.

9. Imagine that the economy is at the intersection of LRAS, SRAS and AD curves. Suppose that a shock lowers the SRAS curve. What kind of stabilization policy can be taken to return the economy to the long run level of Y?

a)Raise money supply

b)Lower money supply

c)Keep money supply unchanged

d)None of the above

10. Actual Expenditure < Planned Expenditure means that firms will

a)Raise production

b)Lower production

c)Keep production unchanged

d)None of the above

In the money market, money supply is determined by the central bank, such as the Fed in the U.S. Because of this, money supply curve is usually vertical in the short run, while the money demand curve is downward sloping. The quantity demanded of money has an inverse relationship with the interest rate, but a direct relationship with both the price level and real GDP. Therefore, when the general price level increases, what will most likely happen?

		A. The money demand curve will shift to the right.
		B. The money demand curve will shift to the left.
		C. Both the interest rate and investment will rise.
		D. Only A and C.
		E. Only B and C.

Suppose workers become pessimistic about their future employment, which causes them to save more and spend less. If the economy is in the Keynesian range of the aggregate supply curve, then

		A. real GDP will fall and the price level will rise.
		B. real GDP will rise and the price level will fall.
		C. only the real GDP will fall.
		D. only the price level will fall.
		E. both real GDP and the price level will fall.

Which of the following will shift the aggregate demand curve to the left?

		A. The federal government increases spending for highways and bridges.
		B. Consumers expect an economic downturn.
		C. The federal government increases income taxes.
		D. Only A and C.
		E. Only B and C.

Which of the following will shift the aggregate supply curve to the left?

		A. All workers agree to a reduction in wages.
		B. The federal government increases the gasoline taxes.
		C. An improvement in technology raises labor productivity.
		D. Only A and C.
		E. Only B and C

There are also two kinds of deflation, the demand-pull deflation and cost-push deflation. Then which of the following is most likely to be true?

		A. An increase in AD will cause the demand-pull deflation.
		B. An increase in AS (or SRAS) will cause a cost-push deflation.
		C. Economists worry about the demand-pull deflation more than the cost-push deflation.
		D. Only A and C.
		E. Only B and C.

The short-run aggregate supply curve (SRAS) can be written as follows: Y = Yf + b (p - pe), where Y = real GDP, Yf = full-employment real GDP, p = price level, pe = expected price level, and b is a positive coefficient. The SRAS can be re-written as p = pe - (1/b)(Yf) + (1/b)(Y). Then which of the following is true?

		A. An increase in pe will cause a rightward shift of the SRAS curve.
		B. An increase in pe will cause a leftward shift of the SRAS curve.
		C. An increase in Yf will cause a leftward shift of the SRAS curve.
		D. Only A and C.
		E. Only B and C.

lavenderoyster638

6) According to Classical theory, the economy is self-regulating. If it is in a recessionary gap, what happens? Question options:

Wages rise, the SRAS curve shifts leftward, and both Real GDP and the price level rise.

Wages fall, the SRAS curve shifts rightward, the price level falls, and Real GDP rises.

Wages fall, the SRAS curve shifts leftward, the price level rises, and Real GDP falls.

none of the above

7) According to the classical economists, which of the following statements is true?

Question options:

Financial markets ensure that S will equal I..

Interest rate flexibility will ensure that planned saving is equal to planned investment.

There is a direct relationship between the amount individuals plan to save and the interest rate - higher rates cause people to save more and lower rates reduce savings.

Interest rates determine how much business firms invest - higher interest rates reduce investment and lower rates increase investment.

All of the above are true.

10)

If actual Real GDP is greater than the full employment Real GDP, then the (actual) unemployment rate is

Question options:

	greater than the natural unemployment rate and an inflationary gap exists.
	less than the natural unemployment rate and a recessionary gap exists.
	greater than the natural unemployment rate and a recessionary gap exists.
	less than the natural unemployment rate and an inflationary gap exists.
	equal to the natural unemployment rate and no gap exists.