In the short run, the equilibrium price level will---and the nation will experience---gap because desired investment---and the short-run equilibrium level of real GDP per year is---real GDP at full employment
3 answers
In the short run, the equilibrium price level may rise or fall depending on the specific circumstances. The nation may experience either an inflationary or a deflationary gap because desired investment may not fully align with consumer spending. The short-run equilibrium level of real GDP per year may be lower than the potential GDP at full employment.
Suppose that the real interest rate suddenly increases
for reasons that have nothing to do with the value of the price level. What happens to the nation's aggregate demand curve? In the short run, will the nation experience an inflationary gap or a recessionary gap? Explain.In the short run, the equilibrium price level will---and the nation will experience---gap because desired investment---and the short-run equilibrium level of real GDP per year is---real GDP at full employment
for reasons that have nothing to do with the value of the price level. What happens to the nation's aggregate demand curve? In the short run, will the nation experience an inflationary gap or a recessionary gap? Explain.In the short run, the equilibrium price level will---and the nation will experience---gap because desired investment---and the short-run equilibrium level of real GDP per year is---real GDP at full employment
If the real interest rate suddenly increases for reasons unrelated to the value of the price level, the nation's aggregate demand curve will shift leftward. This is because higher interest rates tend to decrease consumer and business spending, which decreases the demand for goods and services.
In the short run, the nation will likely experience a recessionary gap as the decrease in aggregate demand will cause a decrease in real GDP below the potential GDP at full employment.
The equilibrium price level will decrease in the short run as the decrease in aggregate demand leads to a decrease in prices. The nation will experience a recessionary gap because desired investment will decrease due to the increase in interest rates, and the short-run equilibrium level of real GDP per year will be lower than the potential GDP at full employment. This could potentially lead to higher unemployment as businesses may lay off workers in response to the decrease in demand.
In the short run, the nation will likely experience a recessionary gap as the decrease in aggregate demand will cause a decrease in real GDP below the potential GDP at full employment.
The equilibrium price level will decrease in the short run as the decrease in aggregate demand leads to a decrease in prices. The nation will experience a recessionary gap because desired investment will decrease due to the increase in interest rates, and the short-run equilibrium level of real GDP per year will be lower than the potential GDP at full employment. This could potentially lead to higher unemployment as businesses may lay off workers in response to the decrease in demand.
3 answers