For each of the following scenarios, state the short-run effect on the AD curve
a. The price level decreases.
b. The target inflation rate increases.
c. The U.S. dollar falls in value relative to other currencies.
d. Government spending increases.
e. The Fed becomes more tolerant of deviations from the target inflation rate.
a. A price level decrease will cause a movement down the AD curve.
b. An increase in the target inflation rate will shift the AD curve to the right.
c. A decrease in the value of the dollar relative to other currencies will increase net exports and shift the AD curve to the right.
d. An increase in government purchases will shift the AD curve to the right.
e. An increase in central bank tolerance of deviations from the target inflation rate will shift the AD curve to the left.
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a. a loss to society since resource owners do not earn it b. the difference between marginal revenue product and marginal resource cost c. a loss to resource owners who earn less than the market value of the resource d. any resource earnings less than that resource's opportunity cost e. any resource earnings greater than that resource's opportunity cost
Structural unemployment is a special type of cyclical unemployment
a. True b. False Indicate whether the statement is true or false