Short Run vs Long Run Aggregate Supply and Phillips Curve

Choose all that apply given the current short-run equilibrium

• recession

• overextended

• short run equilibrium

• sticky or fixed wages and input costs

• Flexible or adjusted input costs or expected/anticipated

The economy is currently operating below full employment, assume no government policy action. How will the economy adjust in the long run?

• positive supply shock, increase SRAS

• negative supply shock, decrease SRAS

• positive demand shock, increase AD

• negative demand shock, decrease AD

• Increase LRAS

The economy is currently at point Q (yellow) on the aggregate model. If Expansionary Fiscal Policy is used to reduce unemployment, how will this change 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)

• B to A

The economy is currently at point Q (yellow) on the aggregate model. If Expansionary Monetary Policy is used to reduce unemployment, how will this change 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)

• B to A

N(red) to Q (yellow) on the aggregate model is shown on the Phillips Curve as

• A to B

• B to C

• A to C

• C to A

The economy is currently at point Q (yellow) on the aggregate model. If no policy action is made to reduce unemployment, how will this change 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)

• B to A

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