Author Question: If the price level in an economy turns out to be higher than that expected by workers and firms, ... (Read 28 times)

moongchi · **on:** Jun 30, 2018

If the price level in an economy turns out to be higher than that expected by workers and firms, _____.
a. businesses increase production.
b. the economy's potential output level increases.
c. the economy's short-run aggregate supply curve shifts rightward.
d. the economy's short-run aggregate supply curve shifts leftward.
e. a recessionary gap develops.

Question 2

People prefer to hold less of their wealth in the form of financial assets like bonds and term deposits when:
a. real GDP is at an all-time low.
b. the real interest rate is above 10 percent.
c. the price level is very low.
d. the nominal interest rate is close to zero.
e. the nominal interest rate is very high.