Suppose that the Fed implements expansionary monetary policy that raises aggregate demand, but individuals incorrectly anticipate the policy measure (bias downward). According to new classical theory, in the short run the price level would ____________ and Real GDP would ______________. In the long run, new classical theory would predict that the price level would ___________compared to its
original long-run equilibrium level and that Real GDP would ____________.
A) rise; decline; rise; remain unchanged
B) rise; rise; rise; remain unchanged
C) rise; decline; remain unchanged; rise
D) fall; rise; remain unchanged; rise
B
Economics
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The aggregate supply curve shows
A) the total of all planned production for an economy. B) that real GDP can only increase when the price level increases. C) what an economy can produce if resource prices are constant. D) the various quantities of goods consumers will purchase.
Economics
Which of the following decisions are complicated by the value of money changing over time?
A. Buying a $100 concert ticket B. Buying a $100 blender C. Buying a $100 sweater D. Buying a $100 stock
Economics