Match the left to the right Shift to dotted line: then whole shift Shift the AS curve C, I, G, X Shift the AD curve AD curve and what causes the downward shape Total Output Total Input The Price Level does not decrease easily Productivity- Per Unit production Costs Ratchet effect Cost-push inflation Initial change in spending multiplier effect Real balances, real interest rate and foreign purchases Full employment level of output Equilibrium Total input cost Total output Change in resource prices, productivity and legal institutional environment

Match the left to the right Shift to dotted line: then whole shift Shift the AS curve C, I, G, X Shift the AD curve AD curve and what causes the downward shape Total Output Total Input The Price Level does not decrease easily Productivity- Per Unit production Costs Ratchet effect Cost-push inflation Initial change in spending multiplier effect Real balances, real interest rate and foreign purchases Full employment level of output Equilibrium Total input cost Total output Change in resource prices, productivity and legal institutional environment

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 2TY

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Assume that a Cob-Dougls production functionis a god representaion of the economy, the substitution efecti stronger than the income efect an tht the economy was intaly at quirum. Suppose that Congress pases alaw that requires al orersto retre at g 72, nstead of 6. Hthe wage is fexble, what il happent uirium outpu? The equilbrium output level wi ncrease OThe euirium outut eve wil derese ( The equilibrium output level will emain constant Not enough information i gven to detemine the answer
Startung trom keng run eaillium, itA suditen decrease en houtetd weath cnes a n AD thw coramy wiperience OA the same lee of pnces nd iower real GOP in the short run O higher pnces and lower real ODP the short. nn Oe. lower prles and lwe mal GOPhe shortrun a krwer ces and the same level of oDP n me shot run
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