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Suppose an economy is in long-run equilibrium. An increase in consumption expenditure will:

A. ​increase the price level in the long run but have no effect on real gross domestic product.

B. shift the aggregate demand curve rightward and increase the real output in the long run.

C. shift the short-run aggregate supply curve rightward and increase both the price level and real output in the long run.

D. ​decrease both the price level and real gross domestic product in the long run.

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Divya Singh
Divya SinghLv10
2 Oct 2020
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Related questions

1. As prices fall, the value of people's existing assets rises and people increase expenditures. This occurs as a result of the:

a. international effect.

b. interest rate effect.

c. money wealth effect.

d. multiplier effect.

 

2. An increase in aggregate demand, in the long run, will change:

a. both output and the price level.

b. neither output nor the price level.

c. the price level but not output.

d. output but not the price level.

 

3. A change in which of the following will shift the long-run aggregate supply curve?

a. The price level

b. Aggregate demand

c. Available resources

d. Sales or excise taxes

 

4. If potential output exceeds actual output, the economy:

a. is experiencing a recessionary gap.

b. is in neither a short-run nor long-run equilibrium.

c. may be in a long-run equilibrium but is not in short-run equilibrium.

d. is experiencing an inflationary gap.

 

5. Keynes believed the economy was:

a. always moving toward potential income.

b. always at potential income.

c. always moving away from potential income.

d. fluctuating around potential income.

An increase in the money supply will:
 
A. not change the​ long-run aggregate supply curve but ultimately will only raise the price level in​ the long-run equilibrium price level.
B. move the equilibrium point along the​ short-run aggregate supply curve.
C. shift the aggregate demand curve outward and to the right.
D. All of the above.

An increase in the money supply will:

A. not change the​ long-run aggregate supply curve but ultimately will only raise the price level in​ the long-run equilibrium.
B. move the equilibrium point along the​ short-run aggregate supply curve.
C. shift the aggregate demand curve outward and to the right.
D. all of the above.

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