Homework Answers
1.
It shifts Aggregate demand curve and it shifts to the right direction.
2.
A. A higher price level, as price level increases.
B. A higher real GDP, because real GDP increases.
C. Lower unemployment rate, because increase in AD will create new jobs and unemployment rate decreases.
3.
The developments in question 2, will create demand pull inflation and it will create SRAS (short run aggregate supply) curve to shifts to the left. It makes to achieve long run equilibrium again. but, the price level increases and it becomes higher than the price level achieved in question 2.
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Please answer these macro multiple choices
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Please answer these macro multiple choices
Which of the following is a defining characteristic of the AD/AS macro model in the short run? O A. firms cannot operate near their normal capacity O B. technology used in production is endogenous and variable O C. factor supplies are assumed to be constant OD. the level of potential output fluctuates with the price level O E. factor prices are assumed to be constant Assume the economy is initially in equilibrium with desired...
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