In the complete model, the economy moves back to potential GDP via
A) gradual adjustment of the price level to restore spending to the level consistent with full employment.
B) gradual shifts of the aggregate demand schedule due to increased investment spending that results from changes in the price level.
C) gradual shifts of the aggregate demand schedule due to increased net export spending that results from changes in the price level.
D) gradual movements in potential GDP that eventually bring it in line with the actual level of real GDP.
E) none of the above.
Correct Answer:
Verified
Q43: Let aggregate demand in an economy with
Q44: An important difference between the complete model
Q45: The Taylor principle emphasizes the importance of
Q46: In the long-run growth model, a decline
Q47: Suppose you observe an increase in both
Q49: Let the price level of a given
Q50: An important distinction between microeconomics and macroeconomics
Q51: The long-run growth model
A) analyzes the adjustment
Q52: In the 32 years from 1970 through
Q53: Suppose that you were to observe GDP
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents