Posted by Bobbie on Sunday, April 8, 2012 at 5:08pm.
I am completely stuck on these two questions. I have read my chapter, but I am still doubting that I got the answers correct.
1.A decrease in aggregate demand causes a decrease in ______ only in the short run, but causes a decrease in ______ in both the short run and the long run.
a)real GDP; the price level
b)the price level; the price level
c)real GDP; real GDP
d)the price level; real GDP
*I believe after reading that the answer is d*
2. Workers and firms both expect that prices will be 3% higher next year than they are this year. As a result,
a)aggregate demand will increase by 3%
b)the purchasing power of wages will rise if wages increase by 3%
c)the short-run aggregate supply curve will shift to the left as wages increase
d)workers will be willing to take lower wages next year
*I believe the answer is c.
3) A decrease in aggregate demand results in a(n)______ in the _____.
a)recession; long run
b)recession; short run
c)expansion; short run
d)expansion; long run
I believe it may be b because there will be less money during a short time but I am unsure.
Thanks for your help
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