Question

In: Economics

In the dynamic aggregate demand and aggregate supply​ model, the rate of inflation will increase​ if:...

In the dynamic aggregate demand and aggregate supply​ model, the rate of inflation will increase​ if:

Select one:

A. AD shifts to the right by more than the LRAS curve.

B. If total production increases faster than total spending.

C. SRAS and LRAS curves shifts to the right by the same magnitude.

D. AD shifts to the right by less than the LRAS curve.

Solutions

Expert Solution

Correct statement : a. AD shifts to the right by more than LRAS curve

When Increase in AD is greater than increase in aggregate supply, price tends to be higher at new equilibrium.

Rahul Sunny answered 1 year ago
Next > < Previous

Related Solutions

Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?
Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?  Potential real GDP increases continuously.  Aggregate demand shifts to the right during most periods. The short-run aggregate supply curve shifts to the right except during periods when workers and firms expect higher wages.  Aggregate demand and potential real GDP decrease continuously.
Utilize the dynamic aggregate demand and aggregate supply model animations and videos in MyEconLab to analyze...
Utilize the dynamic aggregate demand and aggregate supply model animations and videos in MyEconLab to analyze the macroeconomic factors that led to the 2007–2009 recession. How were GDP, inflation, and unemployment affected during the recession, and how does the model show this? What monetary policies and fiscal policies were implemented during the recession? How did the recession affect U.S. trade relations and the U.S. dollar exchange rate?
Distinguish between demand-pull inflation and cost-push inflation and then use an AD-AS (aggregate demand/aggregate supply) model...
Distinguish between demand-pull inflation and cost-push inflation and then use an AD-AS (aggregate demand/aggregate supply) model to illustrate the theoretical effects of these two types of inflation on the price level (P), employment (L) and economic growth (real GDP) in the short run. Now identify the various factors that have contributed towards demand-pull inflation and cost-push inflation in South Africa and critically analyse whether they are consistent with the predictions of the AD-AS model.
Distinguish between demand-pull inflation and cost-push inflation and then use an AD-AS (aggregate demand/aggregate supply) model...
Distinguish between demand-pull inflation and cost-push inflation and then use an AD-AS (aggregate demand/aggregate supply) model to illustrate the theoretical effects of these two types of inflation on the price level (P), employment (L) and economics growth (real GDP) in the short run. Now identify the various factors that have contributed towards demand-pull inflation and cost-push inflation in South Africa and critically analyse whether they are consistent with the predictions of the AD-AS model
Use the dynamic aggregate demand and aggregate supply model and start with Year 1 in long-run...
Use the dynamic aggregate demand and aggregate supply model and start with Year 1 in long-run macroeconomic equilibrium. For Year 2, graph aggregate demand, long-run aggregate supply, and short-run aggregate supply such that the condition of the economy will induce the Federal Reserve to conduct an expansionary monetary policy. Briefly explain the condition of the economy and what the Federal Reserve is attempting to do.
Please provide Refences Utilize the dynamic aggregate demand and aggregate supply model animations and videos in...
Please provide Refences Utilize the dynamic aggregate demand and aggregate supply model animations and videos in MyEconLab to analyze the macroeconomic factors that led to the 2007–2009 recession. How were GDP, inflation, and unemployment affected during the recession, and how does the model show this? What monetary policies and fiscal policies were implemented during the recession? How did the recession affect U.S. trade relations and the U.S. dollar exchange rate?
1.  Are the effects of an increase in aggregate demand in the aggregate demand and aggregate supply...
1.  Are the effects of an increase in aggregate demand in the aggregate demand and aggregate supply model consistent with the Phillips curve? Explain 2. Explain the connection between the vertical long-run aggregate supply curve and the vertical long-run Phillips curve 3. In the long run what primarily determines the natural rate of unemployment? In the long run what primarily determines the inflation rate? How does this relate to the classical dichotomy?
Utilize the dynamic aggregate demand and aggregate supply models to analyze the macroeconomic factors that led...
Utilize the dynamic aggregate demand and aggregate supply models to analyze the macroeconomic factors that led to the 2007–2009 recession. How were GDP, inflation, and unemployment affected during the recession, and how does the model show this? What monetary policies and fiscal policies were implemented during the recession? How did the recession affect U.S. trade relations and the U.S. dollar exchange rate?
Macroeconomics question: Discuss how the aggregate supply/aggregate demand model is different from the basic supply/demand model....
Macroeconomics question: Discuss how the aggregate supply/aggregate demand model is different from the basic supply/demand model. be specific in terms of which factors cause each curve (S,D,AD,SRAS) to shift for each model
If aggregate supply remains unchanged, a decrease in aggregate demand may a. cause demand-pull inflation. b,...
If aggregate supply remains unchanged, a decrease in aggregate demand may a. cause demand-pull inflation. b, move potential real GDP to the left. c. put upward pressure on the price level. d. cause a recession. e. eliminate a recessionary GDP gap.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT