The quantity equation tells us that, in the long run, when the economy is at potential GDP, an increase in the growth of the money supply will.
September 3, 2020
Assume in a private closed economy that the equilibrium level of income is $380 and the MPS is 0. Now suppose government collects taxes of $50 and…
September 3, 2020

Refer to the above graph. Which combination would best explain a shift in real domestic output from Q1 to Q2?

A. Increases in long-run aggregate supply (ASLR1 to ASLR2), aggregate demand (AD1 to AD2), and short-run aggregate supply (AS1 to AS2)

B. Decreases in long-run aggregate supply (ASLR2 to ASLR1), aggregate demand (AD2 to AD1), and short-run aggregate supply (AS2 to AS1)

C. Increase in long-run aggregate supply (AS1 to AS2) and decrease in short-run aggregate supply (AS2 to AS1)

D. Increases in aggregate demand (AD1 to AD2) and decrease in aggregate supply (AS2 to AS1)

KM
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