Short Run vs Long Run Aggregate Supply and Phillips Curve

Choose all that apply if the economy is currently operating at Q.

• recession

• overextended

• short run equilibrium

• sticky or fixed wages and input costs

• Flexible or adjusted input costs or expected/anticipated

Choose all that apply if the economy is currently operating at M.

• recession

• overextended

• short run equilibrium

• sticky or fixed wages and input costs

• Flexible or adjusted input costs or expected/anticipated

Choose all that apply to an economy at N.

• recession

• fully anticipated/expected changes in price levels

• full employment

• sticky or fixed wages and input costs

• Flexible or adjusted input costs

Choose all that apply to a change from Q to N in the short run

• Increase in RGDP

• Higher Price Levels

• recession with Expansionary Fiscal or Monetary Policy action

• recession with no government policy action taken

• no change in RGDP

Choose all that apply to a change from Q to N in the long run

• Increase in RGDP

• Higher Price Levels

• recession with Expansionary Fiscal or Monetary Policy action

• recession with no government policy action taken

• no change in RGDP

Choose all that apply to a change from Q to R

• Decrease in cyclical unemployment

• Decrease in Price Levels

• recession followed by Expansionary Fiscal or Monetary Policy action

• recession adjusting to long run equilibrium with no government policy action taken

• Wages and Prices adjust lower

Choose all that apply to a change from M to N

• Cost Push Inflation

• Increase in Short Run Aggregate Supply

• Inflationary expectations

• Stagflation

• Demand Pull Inflation

Which of the following could cause a shift from N to Q, AD shifts Left

• Increase in Income Taxes

• Central Bank sells Government securities

• an oil shortage

• Corporate Tax Cuts

• Decrease in the Federal Funds Target Rate

A to C on the phillips curve is reflected on the aggregate model by which of the following shifts.

• R to Q

• R to M

• N to M

• Q to N

How would a shift from M (green) to N (red) on the aggregate model be shown on the Phillips curve?

• A to C

• Shift the SRPC downward (left)

• Move the Long Run Phillips Curve

• Shift the SRPC upward (right)

• A to B