Money demand is likely to increase the most during which part of the business cycl A. recession B. trough Ос. рeak O D. contraction O E. recovery

Price Level Juous 17-18. Long-run AS Y₂Y₁ Short-run AS AD Quantity of Real Output Suppose the economy is operating in a recession such as point B in the graph. If policymakers allow the economy to adjust to the long-run natural level on its own, a. people will raise their price expectations and the short-run aggregate supply will shift left b. people will reduce their price expectations and aggregate demand will shift right c. people will raise their price expectations and aggregate demand will shift left d. people will reduce their price expectations and the short-run aggregate supply will shift right

Goverment should focus on a- long run growth and controling defalation  b- lon run growth and controllin inflation  c- short run groth and controllin deflation  d short run growth and controlling inflation

11. Applying the AD-AS model Aa Aa Financial crises, such as the one that impacted many developed countries starting in 2007, decrease banks' ability and willingness to make loans. Decreased availability of credit decreases businesses' ability to make investment purchases and consumers' ability to buy goods and services. As a result, a financial crisis is a negative shock for an economy. The following graph shows an economy's aggregate demand curve and its short-run and long-run aggregate supply curves after a financial crisis has pushed it into recession. Suppose that the government decides not to use stabilization policy and allows the economy to adjust on its own. Determine which curve, the aggregate demand curve or the short-run aggregate supply curve, shifts when the economy adjusts in the long run. Use either the purple line (triangle symbols) to plot a new aggregate demand curve or the tan line (dash symbols) to plot a new short-run aggregate supply curve, to show the economy in…

Question 47 Exhibit: Supply Shock A. O C. O B. LRAS O D. D C A E Y Y Assume that the economy is at point E. With no further shocks or policy moves, the economy in the long run will be at point: SRAS₁ SRASO SRAS₂ AD

Economics How are aggregate output and the real interest rate determined in compettive egulbum? OA The aggregate oulput can be found by multiplying current employment by current real wage at the intesection of the current labour supply and demand curves, given the raal inderest rate. and ssubtracting the level of investment in the economy OB. Cument aggregata output and the real interest rate are determined by the intersection of the output supoly and demand ouves OC. Cunent aggregate output can be found by finding current employment from the intersection of the current labour supply and domand ourves given the real interest rate and aocounting tor total tactor productivity OD. The real interest rate is determined by the slope of the output supply curve at a given level of aggregate output

ון רבSuip Reset the graph and click on the blue square to apply a negative supply shock the the economy. Then adjust the movable point to view the effects of potential policy responses to the negative supply shock. Use what you observe to answer the questions that follow. a. In response to the effects of a negative supply shock, policymakers decide to decrease aggregate demand. What are the effects of this choice? O an increase in aggregate output, and an increase in the aggregate price level an decrease in aggregate output, and an decrease in the aggregate price level an increase in aggregate output, and an decrease in the aggregate price level an decrease in aggregate output, and an increase in the aggregate price level b. What are the overall tradeoffs with regard to this choice? Policymakers have chosen to fight inflation by increasing AD, but this further reduces aggregate output and makes the recession worse. Policymakers have chosen to fight inflation by decreasing AD, but this…

Real Interest Rate R It (a) B (b) G (c) F (d) C (e) D ******** F Figure 8.1 The IS curve ************* 0 A E 18₂ B D ISA 1So Short-Run output Ÿ 18. Consider the IS curve in Figure 8.1. If the interest rate increases and there is a positive aggregate demand shock, the economy will move from point A to point

Suppose market partidpants expect the krona to appredlate relattve to the dollar. In the following graph, shft the supply curve, the demand curve, or both to illustrate the effects of the expectations described. D D QUANTITY (krona) True or False: The expectation that the krona would appreciate actually caused the krona to depreciate. O True O False PRICE (dollars per krona)

Suppose the economy is initially at a long-run equilibrium. The Fed then increases the money supply. In the following three diagrams, assume the resulting inflation is unexpected.