Policy makers are said to “accommodate” an adverse supply shock if they ?

Related Mcqs:

Which of the following statements about economic fluctuations is true ?

A. None of these answers B. A depression is a mild recession C. A variety of spending income, and output measures can be used to measure economic fluctuation because most macroeconomic quantitties tend to fluctuate together D. A recession is when output rises above the natural rate of output...

Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers allow the economy to adjust to the long run natural rate on its own, ?

A. People will reduce their price expectations and the short run aggregate supply will shift right B. People will raise their price expectations and aggregate demand will shift left C. People will raise their price expectations and the short run aggregate supply will shift left D. People will reduce their price expectations and aggregate demand … Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers allow the...

According to the interest rate effect aggregate demand slopes downward (negatively) because ?

A. lower prices increase money holdings decrease lending interest rates rise, and investment spending falls B. lower prices increase the value of money holding and consumer spending increases C. lower prices decrease the value of money holdings and consumers spending decreases D. lower prices reduce money holdings increase lending interest rates fall, and investment spending … According to the interest rate effect aggregate demand slopes downward (negatively) because ?Read More...

Suppose the price level falls but because of fixed nominal wage contracts the real wage rises and firms cut back on production This is a demonstration of the ?

A. sticky-wage theory of the short-run aggregate supply curve B. classical dichotomy theory of the short-run aggregate supply curve C. misperceptions theory of the short-run aggregate supply curve D. sticky-price theory of the short run aggregate supply curve...

Suppose the economy is initially in long-run equilibrium Then suppose there is an increase in military spending due to rising international tensions According to the model of aggregate demand and aggregate supply what happens to prices and output in the short run ?

A. Price fall; output rises B. Price fall; output falls C. Price rise; output fall D. Price rise; output rise...