Assume that the macro-economy is initially in short -run equilibrium.  What happens to the equilibrium price level and equilibrium level of real GDP if interest rates in the economy fall?   Question 4 options:   a)  Both the equilibrium price level and the equilibrium level of real GDP decrease.   b)  The equilibrium price level increases and the equilibrium level of real GDP decreases.   c)  Both the equilibrium price level and the equilibrium level of real GDP increase.   d)  The equilbrium price level falls and the equilibrium level of real GDP increases.

Economics 8

(20) Assume that the economy begins in long run equilibrium and the central bank increases the target interest rate. In the long run, what happens to the price level? Group of answer choices (A) It goes down (B) It stays the same (C) It goes up

Determine whether each of the following would cause a shift of the aggregate demand curve, a shift of the aggregate supply curve, a shift in neither curve, or shift in both curves.      If a shift is caused, indicate which curve shifts, and in which direction it shifts. What happens to aggregate output and the price level in each case?  4. The wages rate decreases.

on Indicate whether the following factor will affect aggregate demand (AD) or aggregate supply (AS) and whether the effect would be an increase or a decrease. Then indicate what will happen to the price level and the level of Real GDP and what type of equilibrium will result assuming that the economy is initially in long-run equilibrium. a) A decrease in the nominal wage rate. b) A decrease in exports. c) A decrease in the exchange rate. d) The discovery of vast new oil field in AD no effect decrease + increase no effect AS increase no effect increase increase decrease decrease decrease Real GDP increase decrease increase increase Equilibrium recessionary gap ⇒ inflationary gap inflationary gap inflationary gap AP ? Q Fir

Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below?   A) A general increase in energy and labor cost for businesses. B) A general decrease in labor cost for businesses. C) An increase in productivity. D) A federal government increase in spending.

Note: Line segments will automatically connect the points. PRICE LEVEL (Billions of dollars) 200 160 120 0 80 160 240 REAL GDP (Index numbers) The equilibrium price level is 320 400 Initial AD The change in government spending the multiplier effect. SRAS New AD ✓, and the equilibrium level of real output is Suppose that the government spending increases by $16 billion and the expenditure multiplier in this economy is 5. On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. the equilibrium level of real output by . The price level increase