1) In the long run, a rightward shift in aggregate demand will cause: A. the inflation...
1) In the long run, a rightward shift in aggregate demand will cause:
A. the inflation rate to fall and output to remain unchanged.
B. the inflation rate to fall and output to rise.
C. the inflation rate to rise and output to remain unchanged.
D. the inflation rate to rise and output to rise.
2) In the short run, a leftward shift in the aggregate demand curve will cause: .
the inflation rate to fall and output to rise.
B. the inflation rate to rise and output to rise.
C. the inflation rate to fall and output to fall.
D. the inflation rate to rise and output to fall.
Homework Answers
1) In the long run, a rightward shift in aggregate demand will cause:
C. the inflation rate to rise and output to remain unchanged (LRAS is vertical at potential output level)
2)
In the short run, a leftward shift in the aggregate demand curve will cause: .
C. the inflation rate to fall and output to fall (equilibrium is determined by AD and SRAS)
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