The aggregate demand curve shows that for specified spending growth rates, inflation rates and real GDP...
The aggregate demand curve shows that for specified spending growth rates, inflation rates and real GDP growth rates are inversely related in the short run.
| A. |
False |
|
| B. |
True |
Transmission mechanisms:
| A. |
can amplify negative shocks. |
|
| B. |
amplify neither positive nor negative shocks. |
|
| C. |
can amplify both positive and negative shocks. |
|
| D. |
can amplify positive shocks. |
Homework Answers
a) "False"
In the short run if the spending growth rate increases the inflation will increase and that will increase the real GDP growth rate, so all of them are directly related in the short run.
b) "C"
The transmission mechanism can amplify both the positive and negative shocks in the economy. that will mainly depend on the decision taken and the condition of the economy.
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