Question

Assume an economy is at​ long-run equilibrium. An inflationary gap results when the A. aggregate demand...

Assume an economy is at​ long-run equilibrium. An inflationary gap results when the

A.

aggregate demand curve shifts rightward and generates a movement along the​ short-run aggregate supply curve.

B.

aggregate demand curve shifts leftward and generates a movement along the​ long-run aggregate supply curve.

C.

aggregate demand curve shifts leftward and generates a movement along the​ short-run aggregate supply curve.

D.

aggregate demand curve shifts rightward and generates a movement along the​ long-run aggregate supply curve.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

ANswer
Option A.

The aggregate demand curve shifts rightward and generates a movement along the short-run aggregate supply curve.

An inflationary gap is where potential output is less than the actual output. It is possible at the right of the long run supply curve, and that increase is possible when AD shifts right from long-run equilibrium.

A left shift of AD from long-run equilibrium is the recessionary gap, and if the long run AS also moves with it then its long-run equilibrium.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which of the following will most likely increase long-run aggregate supply? a. an increase in the...
Which of the following will most likely increase long-run aggregate supply? a. an increase in the rate of investment b. an increase in resource prices c. an increase in the minimum wage d. an increase in the expected inflation rate Suppose the economy is initially in long-run equilibrium and then it experiences a supply shock in the form of sharply higher energy prices. Which of the following is true? a. The short-run aggregate supply curve shifts leftward and the long-run...
1.   Which one of the following shifts the aggregate demand curve leftward? Select one: a. An...
1.   Which one of the following shifts the aggregate demand curve leftward? Select one: a. An increase in the wage rate. b. An increase in the price level. c. An increase in expected deflation. d. A decrease in taxes. e. A decrease in the interest rate. 2.   Consider an economy starting from a position of full employment. Which one of the following changes does not occur as a result of an increase in aggregate demand? Select one: a. Real GDP...
1. Suppose that we are at a long-run equilibrium and suddenly aggregate demand rises. In the...
1. Suppose that we are at a long-run equilibrium and suddenly aggregate demand rises. In the short run this will: a. increase prices. b. increase output. c. increase real wages. d. All of the above. e. Both A and B are correct. 2. The AS/AD model is unable to show a situation in which we have _____ and _____ at the same time. a. inflation;   growth b. deflation;   growth c. inflation;   depression d. deflation;   depression e. inflation; deflation. 3. A...
An economy is in long-run macroeconomic equilibrium, with output at Yp, when the following aggregate demand...
An economy is in long-run macroeconomic equilibrium, with output at Yp, when the following aggregate demand shock occurs: The quantity of money in the economy declines and interest rates increase. What kind of gap (inflationary or recessionary) will the economy face after the shock, and what type of fiscal policies would help move the economy back to potential output? This will cause an inflationary gap; an expansionary policy should be used. This will cause a recessionary gap; an expansionary policy...
Please, draw Aggregate Demand, Short Run Aggregate Supply, and Long Run Aggregate Supply as if an...
Please, draw Aggregate Demand, Short Run Aggregate Supply, and Long Run Aggregate Supply as if an economy is in both short run and long run equilibrium. Now, Suppose the price of oil (an input in the production of many goods) decreases. Can you please Show how this will affect the model starting from (1) above. What happens to GDP, The Price Level, and Potential Output? Is the economy in a recessionary gap or an inflationary gap? Also, Suppose that consumers...
In the short run, determine whether the following event causes a shift of a curve or...
In the short run, determine whether the following event causes a shift of a curve or a movement along a curve. Determine which curve is involved and the direction of the change. An increase in the quantity of money by the Federal Reserve increases the amount of money that people wish to lend, lowering interest rates. This results in a leftward shift of the aggregate demand curve. This results in a rightward shift of the aggregate demand curve. This results...
43)When the aggregate demand curve and the short-run aggregate supply curve intersect, Select one: a. The...
43)When the aggregate demand curve and the short-run aggregate supply curve intersect, Select one: a. The long-run aggregate supply curve must also intersect at the same point. b. Inflation must be increasing. c. Structural and frictional unemployment equal zero. d. The economy is in short-run macroeconomic equilibrium.
When the economy is producing at an output level below the potential output, the unemployment rate...
When the economy is producing at an output level below the potential output, the unemployment rate is above the natural rate of unemployment. the short-run aggregate supply curve will slowly shift to the left when wages start to adjust. the intersection of the short-run aggregate supply curve and the aggregate demand curve is to the right of the long-run aggregate supply curve. the economy might be at the long-run equilibrium. Which of the following is not a determinant of the...
Suppose the economy is currently in both short-run and long-run equilibrium at the equilibrium point indicated...
Suppose the economy is currently in both short-run and long-run equilibrium at the equilibrium point indicated on the graph as "E1". Also suppose that short-run aggregate supply curve is in the very short run where prices are fixed. a. Using the infinite line tool , draw both the short run and long run aggregate supply curves that must exist in order for E1 to be the equilibrium. Label these "SRAS" and "LRAS", respectively. b. Using the 3-pt curve tool ,...
QUESTION 64 Inflation occurs over time as a result of a. long-run aggregate supply increasing faster...
QUESTION 64 Inflation occurs over time as a result of a. long-run aggregate supply increasing faster than short-run aggregate supply. b. a bigger increase in aggregate demand than aggregate supply. c. a bigger increase in aggregate demand than in long-run aggregate supply. d. increases in aggregate demand. 1 points    QUESTION 65 In the short-run macroeconomic equilibrium, real GDP exceeds potential GDP. If aggregate demand does not change the a. long-run aggregate supply curve will shift rightward as the money...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT