What is the relationship among the AD, SRAS and LRAS curves when the economy is in macroeconomic equilibrium?
What will be an ideal response?
When the economy is in long-run equilibrium, the short-run aggregate supply curve and the aggregate demand curve intersect at a point on the long-run aggregate supply curve.
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The key reason that the Laspeyres price index tends to overstate the impact of price changes on consumers is that it:
A) only accounts for price increases and ignore price decreases. B) measures prices two periods after the actual price changes occurred. C) ignores the possibility that consumers alter their consumption as prices change. D) All of the above are correct. E) none of the above
If the aggregate expenditure line shows, for a given price level, how planned spending relates to the level of real GDP in the economy, then which of the following is true?
a. The quantity of real GDP demanded is found where aggregate spending equals real GDP. b. The quantity of real GDP demanded is found where the consumption function crosses the 45 degree line. c. The quantity of real GDP demanded is found where intended inventory investment equals government spending. d. The quantity of real GDP demanded is found where intended inventory investment equals to zero.