Question

true or false

71. WHEN PRICE GOES WAY DOWN THE MARKET EQUILIBRIUM CURVE DOES NOT SHIFT TO THE RIGHT.

72. PRICE IS ABOVE Pe FOR PRICE FLOOR, AND BELOW Pe FOR PRICE CEILING. SURPLUSES FOR PRICE FLOOR.

73. SRAS IS THE SHORT RUN AGGREGATE SUPPLY AND DEPENDS ON PRICE LEVELS IN THE MARKETPLACE. IT SHIFTS TO THE LEFT FOR CONTRACTIONARY MONETARY POLICY.

74. LRAS IS THE LONG RUN AGGREGATE SUPPLY AND IS INDEPENDENT ON PRICES IN THE MARKET PLACE. LRAS NORMALLY TAKES MUCH LONGER TO SHIFTCOMPARED TO AD OR SRAS. 75. RECESSIONARY & CONTRACTIONERY FISCAL POLICY SHIFTS AGGREGATE DEMAND TO THE LEFT.

Answer 1

71) When price falls there is movement along the demand curve to its right which shifts the equilibrium to its right. Thus, this statement is false

72) Price is below equilibrium price for price ceiling and more than equilibrium under price floor. When price is above equilibrium price, there is more supply than demand of goods which result in surplus of goods. Thus, this statement is true.

73) SRAS is dependent upon price level in short run and is upward sloping. Contractionary monetary policy shifts demand curve to its left because of reduction in willingness to pay for goods by consumers. Thus, this statement is false.

74) Long run supply curve is independent on price level and is vertical straight line. It takes more time to shift because it shows the economy is operating at full potential. This statement is true.

75) Contractionary fiscal policy shift aggregate demand curve to left is true because a fall in money supply reduce the circulation of money and willingness to pay for goods which result in fall in aggregate demand of goods.