Refer to the data. Equilibrium Y (= GDP) is:
Answer the question on the basis of the following data for a private
closed economy. The letters Y, C, S, and I are used to represent real GDP, consumption, saving, and investment respectively.
A. $100.
B. $200.
C. $300.
D. $400.
C. $300.
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The main determinant of how quickly expected inflation adjusts to changes in monetary policy is
A) the slope of the Phillips curve. B) the slope of the short-run aggregate supply curve. C) the credibility of the central bank. D) the degree of indexation in the economy.
If the economy is near full capacity, the effect of a negative aggregate demand shock is to
A) increase the level of aggregate demand. B) cause the price level to fall. C) increase the firm's cost of producing at every level of output. D) increase the level of employment.