Suppose the economy is currently in short-run equilibrium at an output below potential level of output. If there is NO government policy, what will happen in the long run? a. Nominal wages will fall, increasing output and lowering overall prices. b. Nominal wages will fall, increasing output and overall prices. c. Nominal wages will rise, decreasing output and raising overall prices. d. Nominal wages will rise, decreasing output and overall prices.

Which of the following is likely to occur if an increase in legal immigrants significantly reduces the wages of workers, ceteris paribus? A. Aggregate supply will decrease (shift left). B. Aggregate supply will increase (shift right). C. Aggregate demand will increase (shift right). D. Aggregate demand will decrease (shift left).

2. Explaining short-run economic fluctuations A majority of economists believe that in the long run, real economic variables and nominal economic variables behave independently of one another. For example, an increase in the money supply, a no long-run effect on the quantity of goods and services the economy can produce, a and nominal variables is known as variable, will cause the price level, a AL AXIS However, in the short run, most economists believe that real and nominal variables are intertwined. Economists use the model of aggregate demand and aggregate supply to examine the economy's short-run fluctuations around the long-run output level. The following graph shows an incomplete short-run aggregate demand (AD) and aggregate supply (AS) diagram-it needs appropriate labels for the axes and curves. In the questions that follow you will identify some of the missing labels. AS variable, to increase but will have variable. The distinction between real variables ?

Explaining short-run economic fluctuations

Suppose in 2017​, the United Kingdom economy was at full employment.   Nominal GDP was ​£2,665 ​billion, the real interest rate was 4 percent per​ year, the inflation rate was 3 percent a​ year, and the price level was 125.   Calculate the nominal interest rate.   In the long​ run, if the real interest rate remains the same but the inflation rate increases to 9 percent a​ year, how does the nominal interest rate​ change? The nominal interest rate is nothing percent a year. In the long​ run, if the real interest rate remains the same but the inflation rate increases to 9 percent a​ year, then the nominal interest rate   ▼   decreases to remains unchanged at increases to ------ percent a year.

40.The Great Depression showed that the short-run aggregate supply and the aggregate demand curves: A. must always intersect at full employment. B.can never lead to deflation. C.can intersect at output levels below full employment. D.must intersect at output levels above full employment.

Question 12 In the short run, unemployment and inflation are positively related. In the long run they are largely unrelated problems. O True False

Most economists use the aggregate demand and aggregate supply model primarily to analyzea. short-run fluctuations in the economy.b. the effects of macroeconomic policy on the prices of individual goods.c. the long-run effects of international trade policies.d. productivity and economic growth.

Suppose the economy is in the long-run equilibrium. b. Now suppose war in the world's main oil- producing region sharply reduces the world oil supply, causing oil prices to rise and increasing the costs of producing goods and services in this economy. Use your diagram to show what happens to output and the price level in the short run. c. Use the sticky-wage theory of aggregate supply to explain what will happen to output and the price level in the long run (assuming there are no policy changes). What role does the expected price level play in this adjustment? Be sure to illustrate your analysis in a graph.

John Maynard Keynes was the founder of modern macroeconomics. He believed that ... Group of answer choices   a. Persistent unemployment was a temporary phenomenon in the macroeconomy b. Consumer and business expectations play a large part in the macroeconomy c. LRAS was unstable d. Consumers and businesses acted together and would resolve downturns in the economy