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, ?

Related Mcqs:

Suppose the price level falls but suppliers only notice that the price of their particular product has fallen Thinking there has been a fall in the relative price of their product they cut back on production, This is a demonstration of the ?

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

A. Output falls; prices are unchanged from the initial value B. Price fall; output is unchanged from its initial value C. Output and the price level are unchanged from their initial values D. Prices rise; output is unchanged from its initial value...

Suppose the economy is initially is long run equilibrium Then suppose there is a drought that destroys much of the wheat crop According to the model of aggregate demand and aggregate supply, what happens of prices and output in the short run ?

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

Stagflation occurs when the economy experiences ?

A. rising prices and rising output B. rising prices and falling output C. falling prices and falling output D. falling prices and rising output...

Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers wished to move output to its long run natural rate they should attempt to ?

A. Shift aggregate demand to the left B. Shift short run aggregate supply to the left C. shift aggregate demand to the right D. shift short-run aggregate supply to the right...