Question

The belief by most economists that real and nominal variables are essentially determined separately in the...

The belief by most economists that real and nominal variables are essentially determined separately in the long run is characteristic of the ________ model.

A.Keynesian

B. aggregate supply

C. classical

D. aggregate demand

Suppose the economy is in long-run equilibrium. Senator A succeeds in getting taxes lowered. At the same time, Senator B succeeds in getting major restrictions on logging enacted. In the short run

A.the price level will rise, and real GDP might rise, fall, or stay the same.

B.the price level will fall, and real GDP might rise, fall, or stay the same.

C. real GDP will rise and the price level might rise, fall, or stay the same.

D. real GDP will fall and the price level might rise, fall, or stay the same.

How does the aggregate-demand curve shift when increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending which shifts the aggregate-demand curve to the left?

Use letters in alphabetical order to select options

  1. A. The curve first shifts to the right and then shifts to the left.

  2. B. The curve does not shift at all.

  3. C. The curve shifts to the left.

  4. . DThe curve shifts to the right.

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Answer #1

1. The belief by most economists that real and nominal variables are essentially determined separately in the long run is characteristic of the classical model. Hence,option(C) is correct.

2. Senator A succeeds in getting taxes lowered, demand curve shifts rightward. And senator B succeeds in getting major restrictions on logging enacted , supply curve shifts leftward. Overall, the price level will rise and real GDP might rise , fall or stay the same. Hence, option(A) is correct.

3. When increased uncertainty and pessimism about the future of the economy lead firms to desire less investment spending shifts the aggregate demand curve to the left. Hence, option(C) is correct.

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