Refer to the above figure. Suppose the economy is in equilibrium at point A
If the Fed tries to stimulate the economy by undertaking an expansionary monetary policy action and this is not expected by the people in the economy, we would expect to see
A) aggregate supply shifts up as people anticipate the effects of the expansionary monetary system. In the short run, real GDP falls to $13 trillion and the price level rises to 120. In the long run, real GDP returns to $14 trillion, and the price level increases further, to 150.
B) aggregate demand increases but people would anticipate this, causing the short-run aggregate supply curve to shift up at the same time, with the new equilibrium of $14 trillion of real GDP and a price level of 100.
C) aggregate demand increases, real GDP increases, and the price level increases in the short run. In the long run, people realize the real situation, causing the short-run aggregate supply curve to shift u
C
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National output and national income are the same because
A) one seller's profit is another seller's loss. B) one seller's profit is another buyer's loss. C) the sale of goods and services generates income for the sellers. D) the sale of goods and services generates tax revenues for the government.
When a single individual performs all the steps involved in the production process he/she incurs:
a. the costs of labor division. b. the costs of being a generalist. c. the cost of specialization. d. the costs of over-utilization of resources.