How does an increase in autonomous expenditure change real GDP in the short run? Does real GDP change by the same amount as the change in aggregate demand? Why or why not?
What will be an ideal response?
In the short run, an increase in aggregate expenditure increases real GDP. However, the increase in real GDP is less than the increase in aggregate demand because the price level rises. The more the price level rises (the steeper the SAS curve) the smaller the increase in real GDP.
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The unemployment rate is the number of people unemployed divided by the
A) number of people employed, then multiplied by 100. B) working-age population, then multiplied by 100. C) labor force, then multiplied by 100. D) labor force participation rate, then multiplied by the population. E) population, then multiplied by 100.
During a period of economic expansion, when expected profitability is high,
A) the demand curve for bonds shifts to the left. B) the supply curve of bonds shifts to the right. C) the equilibrium interest rate falls. D) the equilibrium price of bonds rises.