Question

7 a. Assume that the price level is flexible upward but not downward. b. Assume that the economy is currently operating at its full-employment output. Other things equal, how will each of the following affect the equilibrium price level and equilibrium level of real output in the short run? a. An increase in aggregate demand ? The price level does not change, but real output increases. ? The price level rises and real output decreases. ? The price level rises rapidly, and there is little change in real output. ? The price level does not change, but real output declines. ? The price level increases somewhat, with a relatively large change in output.

          7
a. Assume that the price level is flexible upward but not downward.
b. Assume that the economy is currently operating at its full-employment output. Other things equal, how will each of the following
affect the equilibrium price level and equilibrium level of real output in the short run?
a. An increase in aggregate demand
? The price level does not change, but real output increases.
? The price level rises and real output decreases.
? The price level rises rapidly, and there is little change in real output.
? The price level does not change, but real output declines.
? The price level increases somewhat, with a relatively large change in output.

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7
a. Assume that the price level is flexible upward but not downward.
b. Assume that the economy is currently operating at its full-employment output. Other things equal, how will each of the following
affect the equilibrium price level and equilibrium level of real output in the short run?
a. An increase in aggregate demand
? The price level does not change, but real output increases.
? The price level rises and real output decreases.
? The price level rises rapidly, and there is little change in real output.
? The price level does not change, but real output declines.
? The price level increases somewhat, with a relatively large change in output.

Added by Justin V.

Principles of Economics

Gregory Mankiw 8th Edition

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a. Assume that the price level is flexible upward but not downward. b. Assume that the economy is currently operating at its full-employment output. Other things equal, how will each of the following affect the equilibrium price level and equilibrium level of real output in the short run? a. An increase in aggrebate demand The price level does not change, but real output increases. The price level rises and real output decreases. The price level rises rapidly, and there is little change in real output. The price level does not change, but real output declines. The price level increases somewhat, with a relatively large change in output. a.Assume that the price level is flexible upward but not downward b.Assume that the economy is currently operating at its full-employment output.Other things equal, how will each of the following affect the equilibrium price level and equilibrium level of real output in the short run? a.An increase in aggregate demand O The price level does not change,but real output increases O The price level rises and real output decreases. O The price level rises rapidly.and there is little change in real output. O The price level does not change,but real output declines. O The price level increases somewhat,with a relatively large change in output. ook SK ences

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