In the AD-SRAS-LRAS diagram, what does each curve represent, and what will shift each LEFTWARD?
AD:
SRAS:
LRAS:
Explain the relationship between the different slopes of the SRAS curve and Say's Law and the Keynesian perspective?
In the AD-SRAS-LRAS diagram, what does each curve represent, and what will shift each LEFTWARD?
AD:
SRAS:
LRAS:
Explain the relationship between the different slopes of the SRAS curve and Say's Law and the Keynesian perspective?
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1. | In the money market, money supply is determined by the central bank, such as the Fed in the U.S. Because of this, money supply curve is usually vertical in the short run, while the money demand curve is downward sloping. The quantity demanded of money has an inverse relationship with the interest rate, but a direct relationship with both the price level and real GDP. Therefore, when the general price level increases, what will most likely happen? | ||||||||||||||||
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3. | Suppose workers become pessimistic about their future employment, which causes them to save more and spend less. If the economy is in the Keynesian range of the aggregate supply curve, then | ||||||||||||||||
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5. | Which of the following will shift the aggregate demand curve to the left? | ||||||||||||||||
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6. | Which of the following will shift the aggregate supply curve to the left? | ||||||||||||||||
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8. | There are also two kinds of deflation, the demand-pull deflation and cost-push deflation. Then which of the following is most likely to be true? | ||||||||||||||||
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9. | The short-run aggregate supply curve (SRAS) can be written as follows: Y = Yf + b (p - pe), where Y = real GDP, Yf = full-employment real GDP, p = price level, pe = expected price level, and b is a positive coefficient. The SRAS can be re-written as p = pe - (1/b)(Yf) + (1/b)(Y). Then which of the following is true? | ||||||||||||||||
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6) According to Classical theory, the economy is self-regulating. If it is in a recessionary gap, what happens? Question options:
Wages rise, the SRAS curve shifts leftward, and both Real GDP and the price level rise.
Wages fall, the SRAS curve shifts rightward, the price level falls, and Real GDP rises.
Wages fall, the SRAS curve shifts leftward, the price level rises, and Real GDP falls.
none of the above
7) According to the classical economists, which of the following statements is true?
Question options:
Financial markets ensure that S will equal I.. | |||||||||||
Interest rate flexibility will ensure that planned saving is equal to planned investment. | |||||||||||
There is a direct relationship between the amount individuals plan to save and the interest rate - higher rates cause people to save more and lower rates reduce savings. | |||||||||||
Interest rates determine how much business firms invest - higher interest rates reduce investment and lower rates increase investment. | |||||||||||
All of the above are true. 10) If actual Real GDP is greater than the full employment Real GDP, then the (actual) unemployment rate is Question options:
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