ECONOMICS
AGGREGATE DEMAND
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
An increase in real output, an increase in unemployment, and a decrease in the price level
|
|
|
An increase in real output, an increase in unemployment, and an increase in the price level
|
|
|
An increase in real output, a decrease in unemployment, and an increase in the price level
|
|
|
A decrease in real output, a decrease in unemployment, and a decrease in the price level
|
|
|
A decrease in real output, a decrease in unemployment, and no change in the price level
|
Detailed explanation-1: -The short run in macroeconomics is a period in which wages and some other prices are sticky. The long run is a period in which full wage and price flexibility, and market adjustment, has been achieved, so that the economy is at the natural level of employment and potential output.
Detailed explanation-2: -If an economy is said to be in long-run equilibrium, then Real GDP is at its potential output, the actual unemployment rate will equal the natural rate of unemployment (about 6%), and the actual price level will equal the anticipated price level.
Detailed explanation-3: -Short-run equilibrium-Recession This means that the economy is producing less than full employment output and is in a recession (another way of saying this would be that the economy is experiencing a negative output gap).
Detailed explanation-4: -Short-run equilibrium is when the aggregate amount of output is the same as the aggregate amount of demand. Long-run equilibrium is when prices adjust to changes in the market and the economy functions at its full potential.