Suppose the economy is in long-run equilibrium. If the government decreases its expenditures, eventually the decrease in aggregate demand causes price expectations to
a) fall. This fall in price expectations shifts the short-run aggregate-supply curve to the right.
b) fall. This fall in price expectations shifts the short-run aggregate-supply curve to the left.
c) rise. This rise in price expectations shifts the short-run aggregate-supply curve to the right.
d) rise. This rise in price expectations shifts the short-run aggregate-supply curve to the left.
Answer: a) fall. This fall in price expectations shifts the short-run aggregate-supply curve to the right.
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Indicate whether the statement is true or false
Suppose the unemployment rate remained unchanged at 10 percent from 1999 through 2001 . We can conclude that
a. the same 10 percent of the people in the economy were out of work during the 1999–2001 period b. one of every 10 people in the labor force was unemployed during the 1999–2001 period c. the same 10 percent of the people in the labor force were out of work during the 1999–2001 period d. people in the labor force were out of work for 10 percent of the 1999–2001 period e. 10 percent of the people in the economy were out of work for 10 percent of the 1999–2001 period