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What happens to the income multiplier if the aggregate supply curve is vertical?
the multiplier is zero.
Fiscal and monetary policies are used to shift the aggregate supply curve or the aggregate demand curve?
Aggregate demand curve.
What would cause the aggregate demand curve to shift to the right?
The aggregate demand curve will shift to the right as the economy expands. When that happens, the quantity of output demanded for a given price level rises.
What happens to the aggregate supply curve as the price level increases?
Firms have more of an incentive to increase output
The quantity of full employment occurs when aggregate supply reaches what range?
This happens when the employment is somewhere between 2% and 13%. This range is necessary in order to control the levels of inflation in the country.
What happens to the income multiplier if the aggregate supply curve is vertical?
the multiplier is zero.
Fiscal and monetary policies are used to shift the aggregate supply curve or the aggregate demand curve?
Aggregate demand curve.
What would cause the aggregate demand curve to shift to the right?
The aggregate demand curve will shift to the right as the economy expands. When that happens, the quantity of output demanded for a given price level rises.
What happens to the aggregate supply curve as the price level increases?
Firms have more of an incentive to increase output
Aggregate demand and Aggregate supply curve?
The aggregate demand curve show what consumers are willing to buy at a given price level, whereas the aggregate supply curve shows what producers are willing to produce at a given price level.
How would a rise in business affect the aggregate demand curve?
The aggregate demand curve shifts to the right
The quantity of full employment occurs when aggregate supply reaches what range?
This happens when the employment is somewhere between 2% and 13%. This range is necessary in order to control the levels of inflation in the country.
What happens going from left to right on the aggregate demand curve real GDP?
rises as price level falls
How would a rise in the business investment affect the aggregate demand curve?
The aggregate demand curve shifts to the right
Ceteris paribus the price level will fall when A The aggregate supply curve shifts to the left B The aggregate demand curve shifts to the left C The aggregate demand curve shifts to the right?
b
Can the aggregate demand curve move independently of the aggregate supply curve?
Yes, the aggregate demand curve can move independently of the aggregate supply curve. Factors such as changes in consumer confidence, monetary policy, and fiscal policy can shift the aggregate demand curve without directly affecting aggregate supply. For example, an increase in government spending can boost aggregate demand while aggregate supply remains unchanged in the short term. However, over time, changes in demand can influence supply as businesses adjust to new economic conditions.
What is the meaning of the intersection of three curves the AD curve and the short run AS curve and the long run AS curve?
Using the AD-AS model, start with a long-run equilibrium and assume velocity V is constant, then analyze the following case: The pandemic recession is the result of adverse Demand and Supply shocks. a. What happens to the Aggregate Demand curve and What happens to the Aggregate Supply curve? b. What happens to output Y and the price level P in the short run? c. What short-run problems are created for the labor and goods markets? d. What kinds of stabilization policies are required to stimulate recovery? Describe the 5 specific tools and their directions of change to be used.
