Only a change in the price level can cause shifts in both the aggregate expenditure line and the aggregate demand curve. O a. True O b. False

This graph represents aggregate demand and aggregate supply with the economy in long-run equilibrium. PRICE LEVEL LRAS SRAS AD OUTPUT 6. Which of the following statements best explains the mechanism by which the economy will eventually return to long-run equilibrium after the decrease in transfer payments? Assume no other changes in government spending and taxation programs. O A. The reduction in the inflation rate due to the decrease in aggregate demand causes businesses to lower their expectations about the price level. This leads firms to produce more, shifting the short-run aggregate supply curve to the right, returning the economy to its natural rate of output. B. The reduction in the inflation rate due to the decrease in aggregate supply causes businesses to increase investment, shifting the aggregate demand curve to the right, returning the economy to its natural rate of output. C. The reduction in the inflation rate due to the increase in aggregate demand causes businesses to…

The formula for aggregate expenditure is Select one: O O O a. AE = C+/+ G + NX. b. AE = C+/+G+ NX-depreciation. C. AE=C+I+ G- NX. Macroeconomic indicators can be categorized as "leading" or "lagging". Whic

Consider the graph at right showing the long-run aggregate supply (LAS) and the aggregate demand (AD) curves. Suppose the long-run aggregate supply curve shifts to a real GDP level of $75. O A. The equilibrium price level will fall, and equilibrium real GDP will decrease. B. The equilibrium price level will fall, and equilibrium real GDP will increase. C. The equilibrium price level will rise, and equilibrium real GDP will increase. OD. The equilibrium price level will rise, and equilibrium real GDP will decrease. ----- Price level Po LRAS AD 0 10 20 30 40 50 Real GDP 60 70 80 90 100