Explain the difference between a movement along the aggregate demand curve and a shift of the aggregate demand curve
What will be an ideal response?
There is a movement along the aggregate demand curve if there is a change in the price level. If some factor that affects aggregate demand other than the price level changes, such as monetary or fiscal policy, income in the rest of the world, or expectations, there is a shift in the aggregate demand curve.
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Would you expect a shift in supply to have a greater effect on equilibrium quantity in the short run or in the long run? Explain your answer.
A. A greater effect on equilibrium quantity in the long run because the longer the time period, the more elastic is the good's demand. B. The same effect on equilibrium quantity in the short run and the long run because when analyzing one good, it is predicted that elasticity does not change. C. A greater effect on equilibrium quantity in the short run because elasticity is higher the shorter the time period. This would lead consumers to adjust their quantity greatly. D. A greater effect on equilibrium quantity in the long run because the longer the time period, the greater the increase in income and thus demand. References
"LIBID" is the rate at which U.S. banks
A) lend to their best customers. B) borrow Eurodollar market. C) lend in the Eurodollar market. D) borrow in the jumbo CD market.