In the long run, the price level in an economy is determined solely by:
a. the long-run aggregate supply curve.
b. the aggregate demand curve.
c. the amount of cyclical unemployment in the economy.
d. the short-run aggregate supply curve.
e. the potential output level.
Question 2
When the Fed decreases the money supply:
a. aggregate demand and aggregate supply both increase.
b. aggregate demand increases, which leads to movement along the short-run aggregate supply curve.
c. aggregate demand decreases, which leads to movement along the short-run aggregate supply curve.
d. aggregate supply increases, which leads to movement along the aggregate demand curve.
e. aggregate supply decreases, which leads to movement along the aggregate demand curve.
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