During the 1970s, real shocks to the U.S. economy caused:
a. an increase in both aggregate demand and aggregate supply.
b. an increase in both the price level and the unemployment rate.
c. a leftward shift of the Phillips curve.
d. a decline in inflation but higher unemployment.
e. a decline in both the price level and the unemployment rate.
b
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Which of the following statements correctly differentiates between the slope of the demand curve and price elasticity of demand along a linear demand curve?
A) The price elasticity of demand for a good is the same at different points on the demand curve, whereas the slope of the demand curve varies depending on the point where it is measured. B) The price elasticity of demand for a good varies along the demand curve, whereas the slope of the demand curve remains the same at different points on the curve. C) The price elasticity of demand is a ratio, whereas the slope of a demand curve is a product. D) The price elasticity of demand is a product, whereas the slope of a demand curve is a ratio.
Assume the multiplier is 5 and that the crowding-out effect is $30 billion. An increase in government purchases of $20 billion will shift the aggregate-demand curve to the
a. right by $130 billion. b. right by $70 billion. c. right by $50 billion. d. right by $10 billion.