Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 14, Problem 1PA
(a)
To determine
(b)
To determine
Aggregate supply curve when desired prices do not depend on aggregate output.
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In the sticky-price model, describe the aggregate supply curve in the following special cases. How do these cases compare to the short-run aggregate supply curve we discussed in Chapter 10?
All firms have sticky prices (s = 1).
The desired price does not depend on aggregate output (a = 0).
Which of the following statements best describes the aggregate supply curve?
A) The aggregate supply curve represents the relationship between the price level and the total output or real GDP in the macroeconomy.
B) The aggregate supply curve represents the relationship between the inflation rate and the total output or real GDP in the macroeconomy.
C) The aggregate supply curve represents the relationship between the inflation rate and the total demand or real GDP in the macroeconomy.
D) The aggregate supply curve represents the relationship between the price level and the potential output or GDP in the macroeconomy.
In our Aggregate Demand and Supply model, a decrease in Aggregate Demand would cause which of the following in the short run?
Group of answer choices
a) neither deflation nor inflation
b) deflation and recession
c) inflation and economic growth
d) inflation and recession
e) deflation and economic growth
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