Beginning from full-employment equilibrium, illustrate graphically how each of the following would impact the economy
a. the short-run impact of an unanticipated decrease in the money supply
b. the long-run impact of an unanticipated decrease in the money supply
a. This is shown by a decrease in aggregate demand, which causes a decrease in both prices and real output in the short run.
b. After the decrease in aggregate demand, the economy will be operating at a point below full employment, causing resource prices to fall and short-run aggregate supply to rise. The long-run impact will be a decrease in prices with no change in real output.
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If the price of a movie download falls, the rental rate of DVDs ________ and the equilibrium quantity of DVDs rented ________
A) rises; decreases B) rises; increases C) falls; decreases D) falls; increases
A major cost of unemployment is lost production
a. True b. False Indicate whether the statement is true or false