Suppose an economy experiences technological progress and this causes a shift in the LRAS curve. Which of the following should not occur?
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A. There should be an increase in the amount of income which will cause an increase in AD
B. There should be a shift to the right in the SRAS curve because the increased technology reduces the cost of producing good in the economy
C. There will be reduced pressure on prices as the economy has the ability to produce more real GDP
D. There will be an increase in government purchases as the economy has more income
B. There should be a shift to the right in the SRAS curve because the increased technology reduces the cost of producing good in the economy
C. There will be reduced pressure on prices as the economy has the ability to produce more real GDP
D. There will be an increase in government purchases as the economy has more income
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Related questions
| 10. | The long-run aggregate supply curve (LRAS) is Y = Yf, which depends on the amounts of resources and the level of technology innovation. If a country has more resources and better technology, which of the following is true? | ||||||||||||||||
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| 11. | Suppose the wage rates of workers are based on the expected price level. If there is an unexpected increase in AD, it will cause the actual price level to increase. Then workers should raise their expected price level and negotiate a higher wage rate. Then which of the following is most likely to be true when the expected price increases? | ||||||||||||||||
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| 12. | Suppose the economy is in the long-run equilibrium, i.e., Y = Yf, and there is an unexpected decrease in AD. Assume that Yf is fixed, then which of the following is most likely to be true? | ||||||||||||||||
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| 13. | The short-run (SR) equilibrium is the intersection between AD and SRAS, and long-run (LR) equilibrium is the intersection between AD and LRAS. Every LR equilibrium is a SR equilibrium, but a SR equilibrium is not always the LR equilibrium. If an economy is operating at a SR equilibrium where Y > Yf, which of the following will occur in the process toward the new LR equilibrium when the economy corrects itself? | ||||||||||||||||
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| 14. | From the Keynesians, Y = C + I + G + NX can be transformed into a theoretical model. In particular, assume that the consumption C = A + mpc (Y-T), where A is a constant, mpc is the marginal propensity to consume, Y is national income and T is income taxes. Suppose in the goods market equilibrium, aggregate expenditure = national income such that the two Y's will be the same from Y = A + mpc (Y-T) + I + G+ NX. . Suppose C = 400 + 0.75(Y รขยย T). G = 100, I = 100, T = 100, and NX = 150, what is the Y in the goods market equilibrium? (All of the variables are in terms of million dollars) | ||
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| 15. | Continue to assume that C = 400 + 0.75 (Y - 100), I = 100, and NX = 150. But the government now increases spending from 100 to 200, how much is the new Y in the goods market equilibrium? | ||||||||||||||||
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| 16. | Continue to assume that C = 400 + 0.75 (Y - 100). Then which of the following is true? | ||||||||||||||||
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| 17. | Suppose the federal government needs to balance the budget, which means that when the government spending increases, taxes must increase equally. In this case, government spending multiplier is called the balanced-budget multiplier, defined as the increase in real GDP/increase in government spending. By following the example from the previous question, how mcuh is the balanced-budget multiplier? | ||||||||||||||||
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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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