quiz5 - Price Index LRAS0 SRAS1 E1 SRAS0 e1 SRAS2 Figure 1...

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Extra Credit Quiz #5 Name _____________________________________________ Time _________ 1. Use Figure 1. A shift of aggregate demand from AD0 to AD1 has moved the equilibrium from E0 to e1. How does the goods and services market (GSM), according to Classical Economics, readjust to long-run equilibrium? a. GSM cannot readjust to long-run equilibrium without government intervention. b. GSM reverts back to E0 when wages decrease in the long run (LR). c. GSM moves to E1 when the increase in price level increases wages in the LR. d. GSM moves to E2 when the increase in price level increases wages in the LR.
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Unformatted text preview: Price Index LRAS0 SRAS1 E1 SRAS0 e1 SRAS2 Figure 1 E0 e2 AD1 E2 AD2 AD0 Real GDP Y f 2. In the above figure, what is correct when long run equilibrium moves from E2 to E1? a. Real GDP is different in the two LR equilibria. b. Nominal GDP is different in the two LR equilibria. c. Actual unemployment rate is different in the two LR equilibria. d. Actual price level was equal to the anticipated price level at E2, but it is not equal to anticipated price level at E1....
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This note was uploaded on 02/07/2011 for the course ECON 3461 taught by Professor Spencer during the Spring '10 term at Golden West College.

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